PART II - DRIVE MANAGEMENT MODEL: PROFITABLE GROWTH

Profitable growth

2017 stood out for being a year with important investments and acquisitions, which have allowed us to strengthen our position in some countries and grow in others.

・ In China, the plants Gonvvama Shenyang (North East), Changshu (East) and, at the end of the year, Chongqing (West) started operations.

・ We increased our presence in Mexico with the new Gonvarri Baja California plant.

・ In Europe, the new Laser Automotive Valencia plant stands out and the new plant of Steel & Alloy, Popes Lane, is almost finished. Additionally, the Constructor Group was acquired with which the storage and logistics business is amplified, and so was the Spanish engineering company Suports, Desarollo y Soluciones.

Balance 2017

Gonvarri Steel Services continues to advance towards the objective to increase its international presence and to create value in the communities it introduces itself in. This is possible thanks to a positive balance and adequate financing.

Economic results:

・ Economic Value Created (EVC): 3,066 million euros.

・ Economic Value Distributed (EVD): 3,019 million euros.

・ Economic Value Retained (EVR): 46,9 million euros.

Besides, Gonvarri Steel Services faced different risks which derived from the market situation in the countries it operates in, which have not had a significant global impact on the yearly results due to its diversification over different markets.

Supply Chain

At Gonvarri Steel Services the process of purchasing, hiring outside services, the corresponding approval and management of suppliers is performed on a centralised basis for large volumes, through the Steelmaking Purchasing and Non-Steelmaking Purchasing Departments. All other small-scale purchasing and procurement is performed at the local level at each facility.

In 2016, the total expenditure on suppliers amounted to 3,120,754 thousand euros, 71% of which corresponded to local suppliers.

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