SIDERAR SOCIEDAD ANONIMA INDUSTRIAL Y COMERCIAL

and the industrial activity, which he considered to be the basis for economic prosperity and growth. Roberto Rocca was born in Milan in 1922. He studied mechanical engineering, graduating from the Politecnico di Milano in 1945.


He continued his studies at the Massachusetts Institute of Technology, obtaining his Ph.D. in Metallurgical Sciences in 1950. In 1945 Roberto Rocca joined his father Agostino, one of the central figures in the Italian steel industry between the wars, in founding Techint.


In the 50s and the 60s he made his contribution to the rapid growth of this new company operating in the steel sector, as well as in engineering and construction, with its main offices in Buenos Aires, Milan, Sao Paulo and Mexico City. When he succeeded his father at the head of the group in 1978, Techint was an organization employing 15,000 workers, operating two steel plants in Argentina (Siderca at Campana, producing seamless steel tubes, and Propulsora Siderúrgica at Ensenada, producing flat steel sheet), also active internationally in the field of engineering and construction, mainly in Latin America. In the 1980s Roberto Rocca promotes an important growth in Techint´s industrial activity, with a series of investments in the plants, in technology and research.


This program concludes with the expansion of the Siderca plant at Campana, enabling the Group to play a leading role in the international market for seamless tubes. In the 1990s Tamsa in Mexico and Dalmine in Italy are added to the Techint Group, as well as other businesses in Japan, Canada, Brazil and Venezuela. This lays the foundations to create Tenaris in 2002, a corporation listed on the NYSE and the exchanges of Buenos Aires, Milan and Mexico.


This company, of which Roberto Rocca becomes Chairman of the Board, gathers together all the Group 9s activities in the tubes segment. During the same decade another great steel undertaking takes place, the creation of an integrated flat steel production center based on Siderar, which combines the activities of two Argentine companies, Propulsora Siderúrgica and Somisa. With the purchase of Sidor in Venezuela at the end of 1997, the Techint Group - 2 - becomes a leading player in the Latin American market for flat and long steel.


In 1999, Roberto Rocca receives the Willy Kork Award, the highest international distinction for steel industry leaders. The engineering and construction segments are also developing vigorously, encouraging the Techint Group to participate in other areas: oil, with the creation of Tecpetrol in 1981; services, venturing into the world of telecommunications through Techtel and Sirti; and health, through the Humanitas hospital network in Italy. Today, 25 years from the day when Roberto Rocca takes over at the head of the Group, Techint is a worldwide fact, with over 50,000 employees and a network of industrial plants and operating centers on four continents.


Commitment to industrial development in the countries in which the Group operates, and a thorough awareness of corporate social responsibility, have been the leitmotiv of his business practice. Investments in the plants; the creation of a leading edge industrial research organization; the care taken to ensure the highest professional standards are observed by human resources graduated from the world 9s leading universities; the building of a transparent relationship system with investors, personnel and local communities; the search for quality and excellence have all exceeded the bounds of the activities of the Techint Group, becoming transferred as values of the communities themselves. I.


SUMMARY FOR THE YEAR The consolidated result for the fiscal year ended December 31, 2003 was a profit of $ 422.2 million. The net result included an equity gain of $ 46.0 million related to the participation in related companies Ylopa and Amazonia (Sidor). For the previous fiscal year the result was a profit of $ 40.7 million, including an equity loss of $ 13.1 million generated by the investment in Amazonia (Sidor).


During the year the recovery of the Argentine economy gained strength. Following the severe crisis experienced in 2002, steady growth in the industrial and construction sectors and consumption enabled the Company to record a significant improvement in the volume of shipments to the domestic market. The international market benefited from sustained demand from China, and crude steel production and consumption figures recovered in almost all regions, in a context of prices that were higher than during the previous fiscal year.


Total shipments amounted to 2,257 thousand tons and the production of hot rolled products reached 2,471 thousand tons, higher than the 2,099 thousand tons and 1,954 thousand tons respectively in the previous fiscal year. Total shipments represented a historical record for the Company. The volume of sales on the domestic market totaled 1,232 thousand tons, an increase of 66% compared to the 742 thousand tons last fiscal year.


Sales to foreign markets reached 1,024 thousand tons, 24% less than the 1,356 thousand tons shipped in the previous fiscal year. This drop in the volume of exports as a result of the recovery in domestic market demand was absorbed by reducing participation in non-traditional markets in Asia and Africa. During the course of the year personnel numbers were reduced by 209, so that at the end of the year the Company had a total of 4,724 employees.


On March 18, 2003, Siderar S.A.I.C. signed an agreement with its creditors for the restructuring of the terms and conditions of its financial debt for a total of US$ 473.6 million, which included Bilateral Export Pre- Finance, Corporate Bonds, a Syndicated Loan and Bilateral Import Finance. On June 20, 2003 the indirectly-held related company Consorcio Siderurgia Amazonia Ltd.


(Amazonia) and its subsidiary Siderúrgica del Orinoco C.A. (Sidor), reached an agreement with their financial creditors and the government of Venezuela for the restructuring of the financial debt of Sidor and Amazonia. According to the terms of the agreement reached, the financial debt of Sidor and Amazonia was lowered from US$ 1,883 million to US$ 829 million.


The result of the participation in Ylopa and Amazonia during the year was a profit of $ 46.0 million. - 3 - II. COMMERCIAL AREA During the fiscal year ended December 31, 2003 shipments to the domestic market totaled 1,232 thousand tons, 66% more than the volume recorded in 2002.


This growth was due to the recovery in economic activity after the significant fall at the start of 2002, and to import substitution, not only of steel but also of manufactured goods. Gross domestic product is estimated to have grown by 8.4% in 2003, recovering part of the 10.9% fall recorded in 2002. Industrial activity, measured according to the Monthly Industrial Estimator (EMI), in 2003 recorded a year-on-year rise of 16.3%.


In addition, activity levels in the construction industry, measured according to the Summarized Construction Industry Indicator (ISAC) show an increase of 37.6%. The agricultural sector also recorded a year of growth, driven mainly by high international prices for soybean that stimulated investment in the sector. Domestic market shipments of galvanized products, used mainly by the construction and agricultural sectors, were 64% higher than in the previous fiscal year.


Shipments to can manufacturers were 40% higher than in the previous fiscal year, largely due to the concretion of export sales for peaches, tomatoes and aerosols, as well as the increased domestic consumption of paints, influenced by the construction activity growth. The volume shipped to manufacturers of agricultural machinery went up 135% during the year, confirming the recovery in this sector. Although the household goods sector was one of the most severely affected by the recent crisis, and records a significant volume of imports, shipments by the Company to that sector increased by 129%.


Growth was concentrated mainly on the gas-fired household goods segment, which had been least affected by the increase in imports from Brazil. The auto industry has not yet shown signs of any significant recovery, with local car manufacturing totals reaching 170 thousand units, only 6% higher than in 2002. Siderar 9s shipments to the sector increased 10% as a result of the increase in auto manufacturing and steel import substitution.


Consumption of plate for pipes fell 20%. Nevertheless, Siderar 9s shipments to the sector went up by 50%, once again as a result of the replacement of imported material. Shipments in the fiscal year (Th.


Tons) Domestic Market Export sales Total Hot rolled steel 529 238 767 Cold rolled steel 322 388 710 Coated an others (*) 381 397 779 Total 1,232 1,024 2,257 (*) Includes 51 thousand tons of slabs in export sales. Continuing with our export strategy, our commercial agent Techint Engineering Company B.V. opened two new sales offices during the year, one in China and the other in Peru, in order to provide better assistance and promotion for exports.


- 4 - Export sales totaled 1.024 thousand tons, accounting for 45% of total shipments and representing a decline of 24% compared to the previous fiscal year. These shipments continued to be highly diversified, with exports being sent to around 30 countries. The breakdown of exports of finished products by region was as follows: North America 12%, Latin America 22%, Europe 44%, Africa 3% and Asia 19%.


In view of the reduction recorded in export tonnage, priority was assigned to traditional markets (such as Europe and Latin America) rather than non traditional markets (Asia and Africa) which lost share from 31% of shipments in 2002 to 22% in 2003. In November 2003 the World Trade Organization ruled that the safeguard duty imposed by the United States on steel products was inconsistent with the legislation of that organization. As a result, in December 2003, the US government lifted the measure, eliminating duties of up to 30% on steel imports.


In any event, imports from Argentina were not covered by the safeguard measures, as it is a developing country and such imports accounted for less than 3% of the total. Following the decision adopted by the United States, on December 5, 2003 the European Community Commission resolved to eliminate the application of safeguards by its members. A quota system had been established by the Commission in September 2002.


This measure affected Siderar 9s exports of hot and cold rolled sheet, although it did not have a substantial impact on the level of exports to the region. During 2003 the Metalworking SMEs Development Department was created under the cPROPYMES d program of the Techint Organization. Its aim is to improve the competitiveness of the customers and suppliers of Siderar, whether by an increase in exports or the substitution of imports by the products manufactured by such companies.


Support covers commercial, financial, industrial and institutional aspects, and 97 companies have been assisted over the course of the year. These companies increased their billing by 58% and their exports by 54% compared to 2002. In the financial area, Siderar made a further contribution of $ 5.8 million in its capacity as protecting partner of Compañía Afianzadora de Empresas Siderúrgicas S.G.R., to guarantee the granting of loans to SME members on favorable terms.


It should be noted that there was a drop in interest rates and an increase in liquidity in the financial system, although this is not yet reflected in an increase in lending to the private sector. III. INDUSTRIAL AREA Production during the year was the highest in the history of the Company, mainly due to the recovery of the domestic market