The CAP Group businesses have developed mostly amid a volatile and adverse external scenario affected by a sharp decline in the price of iron and steel, heightened by certain internal variables that have also impacted growth. This scenario has been evident for almost three years now, with a pronounced drop in international iron ore prices. On the other hand, in terms of steel production, the decline in product prices exceeded cost savings in main inputs, with the ensuing drop in overall business margins. All of this has negatively impacted the revenues and profitability of mining and steel companies around the world; a phenomenon that has also affected CAP.

In terms of steel production, the international scene has not improved. The steel industry continues to face very difficult moments whose origin lies in excess steel producing capacity, particularly in China; which, in turn, has deteriorated margins and profitability in all markets – including China’s own domestic market. The foregoing has resulted in growing steel exports to countries with production overcapacity at prices unquestionably incompatible with their costs. Unfortunately, Chile’s economic slowdown along with persistent price distortions (partially offset by antidumping measures introduced by the Government of Chile), could threaten the continuity of Chile’s steel industry.

In tandem with this scenario, the company launched a Strategic Transformation Program (“We create future”), from which it is developing capabilities for a new CAP, more resilient, diversified and focused on excellence, costs, productivity, sustainability and innovation (see highlight).

The company has made progress in all of these fronts. In terms of diversification and innovation, it is worth noting Cintac Solar’s new business, TASA’s expansion toward the “big tubes” market, and the development of special steels based on CAP Acero’s competitive advantages, among others. These achievements have been complemented by an excellent safety performance; one of the company’s strategic pillars.

An important aspect of the company’s transformation is the expansion of businesses to others close to those current ones in which it enjoys competitive advantages. The recent emphasis placed on enhancing its infrastructure assets (ports, desalinization plant, and electrical transmission line), thereby developing a new business area, plays an important role upon partially albeit increasingly mitigating the volatility of the Group’s more traditional undertakings.

All of these measures have already begun to yield fruits. Thus, toward the end of 2016, the company’s consolidated revenue totaled US$ 60.2 million, equivalent to 28 times the result obtained toward the end of 2015. The company’s revenue and EBITDA amounted to US$ 1,635.6 million and US$ 442.6 million, representing increases of 10.9% and 54.5%, respectively, as compared to the previous year.