Q4/2014 Report

On the one hand, Centravis benefited from a substantial devaluation of the Ukrainian Hryvna which had artificially been fixed for much too long. Thanks to lower conversion cost, the company becomes more competitive in international markets. On the other hand, Centravis was hard hit by the Ruble’s sudden and dramatic decline in late 2014, when its rate to the USD fell from RUB 32 to more than RUB 60.
If not for the sudden drop in sales to Russia in the last quarter of 2014, Centravis would have achieved its sales budget fully. However, sales volumes still increased by 15% over the preceding year and thus outperformed the market. Revenue growth was lower at 3%, mainly due to lower prices and a weaker Euro. Both gross profit margin and EBITDA margin improved and achieved very satisfactory levels. Financial debt was reduced, and working capital remained well maintained.
Operationally, Centravis saw good results from various initiatives started during the year. Both the maintenance system and the safety concept were completely overhauled. The Company developed and implemented new technologies and thus broadened its product range, in particular in the field of long-length furnace tubes. The quality of its products was further improved.
The environment in which Centravis worked in 2014 was most demanding. Both the Ukraine and Russian markets experienced severe economic turbulences. The Ukraine banking system remained very weak. Ukraine itself was confronted with military action in its very eastern regions of Luhansk and Donetzk which, fortunately, are in safe distance from our Nikopol plant.
Centravis has withstood all these challenges due to a dedicated workforce and efficient risk management. Our Nikopol plant remained unaffected by the events in the Luhansk and Donetzk areas. Schedules for shipment have been honoured at all times. And most importantly, we have customers that trust us, value our products and services, and thus create stable demand.
2015 will again be a challenging year, as the political and economic environment remains volatile. However, there are strong signs of improvement as the fighting in Eastern Ukraine has calmed down and a comprehensive financial aid package from Western countries has been put in place. Measures to rebuild the Russian market have been taken and volumes are picking up. While markets in Western Europe and the United States are calm for the time being, there are good prospects for customers in East Asia. Cost structures are constantly been optimized.
As of today, the situation in the Company is stable, production units are operating steadily, and orders are being shipped according to schedule. We have regular supplies of billets and other materials. Deadlines for shipment are met without fail, and the trucks with our products are crossing borders without delay.
We would like to use this opportunity to thank our customers that have supported us. Some of them have deliberately increased order volumes to show their solidarity in difficult times. We are grateful for this.
Centravis will continue to be a reliable partner in a global business, with a lasting commitment towards quality and service.

Nikopol, April 6, 2015

Peter Kratz Chairman of the Board
Yuriy Atanasov Chief Executive Officer