The company also operated with 118 administrative employees, and a new CEO, Enrique Salazar was appointed in may 1996 to assume operational responsibility under Pablo Este. Other members of senior management under Giganto Acero ownership held the same positions now, with the exception of the former company president, who ha resigned in February 1997
Six top managers other than Pablo Este held 25 percent of the stock outstanding at the end of 1996. Sr. Este held 58 percent. Este’s investment partners held the balance of the shares outstanding.
THESTEEL INDUSTRYIN 1997
In 1996 the Argentine steel industry enjoyed a moderately profitable year. Several factors accounted for this turn around in the industry. First, capacity cutbacks and modernization programs of the past half decade paid off; the industry reached 80 percent capacity in 1996, with utilization for high-demand items near 100 percent. In addition, the birth of the Mercosur trade group promoted more trade by Argentine firms with customers in Brazil and Uruguay
Forecasts for 1997 and the next three to five years were favorable but contingent on producers continuing their recent efforts remain competitive in the industry. Domestic steel shipments were estimated to be 70 million metric tons, slightly below 1996 because of cutbacks in inventories rather than lower consumption. Imports were expected to continue their decline from the 1996 level of 20 million metric tons to less than 19 million tons in 1997
ROSARIO ACERO S.A.’S OUTLOOK
Rosario Acero S.A.’s revenues and earnings had grown since the company began operations in July 1993. The company’s balance sheets and income statements for this period are provided in Exhibits 3 and 4. Management predicted continued growth into the new century, with different product lines growing at different rate. Annualized rates of growth from 1996 to 2002 were projected by line as follows:
Product Line1996 Sales1996-2002 Projected
(in millions) Growth Rate
Rolling-mill rolls$ 16.013.9%
Castings 9.0 1.4
Slag pots 1.419.6
Mill liner 1.614.5
Continuous caster rolls 3.3 5.7
Fabricated and other 3.5 6.8
Total$34.8 10.32% (Average)
388
In addition to continuing to serve present customers, Sr. Este wanted the company to pursue customers outside Mercosur. As yet, Management had taken no action to investigate external markets, largely because of capital constraints on the firm.