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The Warsaw Voice » Business » July 9, 2008
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July 9, 2008   
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Piotr Janeczek, president and CEO of Stalprodukt company, talks to Hanna Smolańska.

Your company has been showered with awards over the past several years. Did you expect to become this successful when Stalprodukt started its operations over a decade ago?
When we started out in 1992, the atmosphere was totally business-unfriendly, but we-2,700 people in all, the managers and employees of two departments of the former Sendzimir steel mill-took the risk. We set up a new company and leased Sendzimir's assets and took on its considerable debt. We undertook to buy all those assets within four years.

And you kept your promise, mainly because you gained the trust of banks. Some time later Stalprodukt was listed on the Warsaw Stock Exchange. In this way, you raised funds to reduce the company's debt and finance further development. Would you call that a spectacular success?
A carefully planned one and worked out with consistency. Sometimes a success can be very short-lived and at other times it even becomes a crisis. We have always avoided crises.

Apparently, you are faithful to what Abraham Lincoln once said: "I am a slow walker, but I never walk backwards."
This is a strategy of organic growth, which takes a little more time, but is free from unnecessary risks.

This strategy has won you the trust of investors and first place on the Top TSR list of companies traded on the Warsaw Stock Exchange. Companies in the league table generated growth rates far above the average on the trading floor; their value for shareholders increased more than fivefold, and they developed three times faster than the largest listed companies.

In line with our strategy, we take baby steps and resist trends and fads. In the past couple of years, it was very trendy on the stock exchange to grow rapidly through mergers and acquisitions, which frequently had a bad effect on both the issuers and the investors.

We focus on what we are good at, that is we maintain the right balance between the areas we operate in. We do not get sidetracked or take the risk involved in restructuring the companies we acquire. You gain credibility when you have a plan for three to five years and carry it out consistently, demonstrating development that translates into profit. Most investors on mature markets look at the foundations of companies, as they want to be sure their money is invested in the right way.

Last year, Stalprodukt was singled out for praise among companies that "change Polish industry" by the Polish Association for the Promotion of Entrepreneurship. The citation underlined the company's expansiveness and ability to navigate through the difficult market for trade in metallurgical products. It also mentioned the fact that you owe your strong position on the market to investment in high value-added products as well as your distribution network.

When we started building the network in 1997, many said we were out of our minds and asked if you really had to buy a brewery to have a beer. A decade later, this network turned out to be one of our most valuable assets, covering practically the whole of Poland. We have achieved this at an incomparably lower cost than what we would have to pay today. Another spot-on move was to give up the production of dynamo steel and focus exclusively on transformer steel.

For transformer steel, Stalprodukt received the Medal of the Association of Polish Exporters and the Outstanding Exporter 2007 title.

Our steel is considered to be an export hit. Thanks to investment in the transformer steel division, we get a high margin and have exceptionally safe prospects for development. Around two-thirds of our profit comes from transformer steel and global demand for these products is rising rapidly. Our position is getting better all the time. We are no longer players on the local market alone and we aspire to become a business that makes its mark in the world.

Stalprodukt has for the second time received the prestigious Rzeczpospolita Eagle prize in the industrial company category. The prize accompanies the newspaper's Top 500 league table. Stalprodukt has been climbing up the table steadily and it now ranks 164th, having gone a dozen or so notches up since last year.

That makes us happy and shows that we have adopted a good and rational strategy by improving the company's performance irrespective of market trends.

But the market trends are good for you, and you do not really need to fear competition, do you?
The demand for our products is high, boosted by imports from China, so it is possible to predict that many producers will increase their output, as we will. The barriers for entering the market are so high that the arrival of new players is unlikely.

What if there are new challenges, such as consolidation?
Who knows, perhaps we will take part in this process. Nothing is impossible.

But for now you are still pursuing your strategy of organic growth-is that correct?
This is a proven strategy, as shown by our results. Back in 2002, Stalprodukt's profit stood at zl.7.4 million; the next year it rose to zl.13.1 million. In 2004, the figure leapt to zl.60.2 million, followed by zl.75.8 million in 2005. Last year, our profit soared to zl.350.2 million.
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