Rautaruukki Corporation Interim Report Q1/2014:...

Rautaruukki Corporation Interim Report 24 April 2014 at 9am EEST

Rautaruukki Corporation Interim Report Q1/2014: Comparable operating profit at previous year's level, net sales of special steels up 16%

January-March 2014 (Q1/2013)
- Order intake was EUR 560 million (590).
- Comparable net sales were EUR 581 million (589).
- Reported EBITDA was EUR 28 million (37).
- Comparable operating profit was EUR 5 million (4).
- Comparable result before taxes was -EUR 11 million (-4).
- Net cash from operating activities was -EUR 21 million (22).

Guidance for 2014:
Comparable net sales in 2014 are estimated to grow compared to 2013. Comparable operating profit in 2014 is estimated to improve compared to 2013.

KEY FIGURES
			Q1/14	Q1/13	2013
Comparable figures
Comparable net sales, EUR m			581	589	2,404
Comparable operating profit, EUR m			5	4	39
Comparable operating profit as % of net sales			0.8	0.8	1.6
Comparable result before income tax, EUR m			-11	-4	-1
Reported figures
Reported net sales, EUR m			581	590	2,405
Reported EBITDA, EUR m			28	37	168
Reported EBITDA as of % of net sales			4.8	6.4	7.0
Reported operating profit, EUR m			-4	4	34
Reported result before income tax, EUR m			-20	-4	-6
Net cash from operating activities, EUR m			-21	22	184
Net cash before financing activities, EUR m			-36	7	101
Earnings per share, EUR			-0.14	-0.03	-0.10
Return on capital employed (rolling 12 months), %			1.4	-4.1	1.8
Return on capital employed (annualised), %			-0.9	0.8	1.8
Gearing ratio, %			74.1	72.4	68.5
Equity ratio, %			44.4	44.3	45.0
Personnel on average			8,572	8,876	8,955

PRESIDENT & CEO SAKARI TAMMINEN:

"Despite a strengthening of the eurozone Purchasing Managers' Index and GDP development returning to positive at the end of last year, European economic development continued to be uncertain during the first quarter. However, indicators forecasting economic growth were rising in all eurozone countries and predicting a turn for the better. Steel use has, however, decreased significantly during recent years as a result of structural change in the Finnish manufacturing industry. The situation in our home market is worrying.

The Ukraine crisis and its multiplier effects on economic growth in Russia have not yet been significantly reflected in Ruukki's everyday business in either Ukraine or Russia. Nevertheless, the impacts of the crisis on exchange rates resulted in a non-cash calculated exchange rate loss of around EUR 8 million in Ruukki's finance costs during the report period. The unstable situation in Ukraine increased uncertainty in growth potential not just in Russia, but also in Finland and across the whole of Europe, and it is still impossible to assess the ultimate effects of the situation.

As regards Ruukki's most important markets, the pace of economic growth in Sweden and Norway continued to outperform growth in the eurozone also during the first part of the year. Construction activity in our main market areas continued at a low level also taking into account normal seasonality. Apparent demand for steel across the EU grew by an estimated 3% year on year during the first quarter and capacity utilisation rates in the European steel industry showed a slight rise. Due to the uncertain economic situation and lower market prices of raw materials, inventory replenishment was more moderate than expected and this in turn had a negative impact on the price development of steel products.

Ruukki Metals' order intake and net sales were at the same level as a year earlier. Higher order and delivery volumes of special steel products in particular offset the negative impact of lower average selling prices compared to a year earlier. An especially positive note in the first quarter was that net sales of special steels were up 16% year on year and 5% quarter on quarter. A weakening of certain currencies in emerging markets outside Europe impacted negatively on the order intake value of special steels.

In the construction businesses, development continued to be twofold also during the first quarter of the year. Given market conditions, overall demand for building products was at a very good level. Order intake and net sales for roofing products in particular showed clear growth compared to a year earlier. Demand in commercial and industrial construction continued to be weak, especially in Finland, and this was reflected in a significant decrease in Ruukki Building Systems' order intake and net sales. Also in Sweden and Norway, customers' investment decisions in commercial and industrial construction were pushed back.

Comparable operating profit was EUR 5 million. Despite a good capacity utilisation rate and the positive development seen in relative share of special steels, clearly lower average selling prices drove operating profit below the level of a year earlier. However, even in these difficult market conditions, Ruukki Metals posted comparable operating profit of EUR 12 million, which is in line with the original targets of cost saving programmes completed. Ruukki Building Products broke even during a seasonally difficult first quarter, which in these market conditions can be considered a good performance. Ruukki Building Systems' operating result, however, was still negative due to lower than expected project volume. Consolidated cash flow was EUR 21 million negative because of EUR 44 million tied up in net working capital. Net debt rose slightly since the end of 2013 and was EUR 731 million. The gearing ratio was 74.1%.

During the report period, growth of special steels was pursued by signing up new customers, launching new products and applications, and by further expanding into new market areas. Compared to the previous year, the results are beginning to be seen in the form of growing order and delivery volumes in many market areas. Compared to the previous quarter, sales of special steel products rose to account for 35% (30) of Ruukki Metals' net sales. The target is to achieve annual sales of special steel products of EUR 850 million in 2015 (2013: EUR 558 million).

In our construction businesses, we will continue our chosen strategy of energy efficient construction. Ruukki Building Products has a good market position in our main markets and we are aiming for profitable growth, especially through energy-efficient building components and residential roofing products. Development of components and solutions to optimise a building's lifecycle energy efficiency is a key aspect. Sales of the new solar thermal products for single-family homes we launched earlier in the year have got off to a good start. Also in weak market conditions, renovation construction creates growth opportunities for building products. In Ruukki Building Systems, our main aim is still improved profitability through better project management and more cost-efficient manufacturing.

We expect demand for steel to pick up slightly in 2014. Nevertheless, demand growth will continue to be limited by overcapacity in the steel markets and slowing economic growth in emerging countries. We expect demand for special steels to outpace demand for standard products, especially in market areas outside Europe. We forecast a modest recovery of construction growth in most of Ruukki's main market areas in 2014, albeit at a very low level.

Comparable net sales in 2014 are estimated to grow compared to 2013. Comparable operating profit in 2014 is estimated to improve compared to 2013.

On 22 January 2014, SSAB and Rautaruukki announced a plan to combine the two companies through SSAB making a public share exchange offer to Rautaruukki's shareholders which Rautaruukki's Board of Directors recommends to the company's owners. The Board of Directors of Rautaruukki in its statement announced on 26 March 2014 recommended to Rautaruukki shareholders that they accept the share exchange offer. The largest shareholder of Rautaruukki, Solidium Oy, which holds 39.7% of all Rautaruukki shares, has undertaken to accept the share exchange offer. The offer period began on 14 April 2014 and will expire on 12 May 2014, unless the offer period is extended. I believe that the combination of Ruukki and SSAB gives an excellent opportunity to continue the rationalisation of the cost base of the companies and build a new Nordic steel producer that is able to transit the steel business towards a global special steel company. There is also a good synergy potential in the construction business which offers profitable growth potential on top of the synergy benefits. "

Rautaruukki Corporation's full interim report for Q1/2014 is attached to this release.

For further information, please contact
Sakari Tamminen, President & CEO, tel. [phone]
Mikko Hietanen, CFO, tel. [phone]

News conference for analysts and the media
A joint news conference in English both for analysts and the media will be hosted on Thursday 24 April at 10.30am at Ruukki' s head office, Suolakivenkatu 1, 00810 Helsinki.

A live webcast of the event and the presentation by the company's President & CEO Sakari Tamminen may be followed online on the company website at www.ruukki.com/Investors starting at 10.30am EEST. This event can also be attended through a conference call by dialling the number below 5-10 minutes before the scheduled time:
[phone] (calls outside Finland)
[phone] (calls inside Finland)
Access code: 943088

A replay of the webcast can be viewed on the company's website from approximately 4pm EEST. A recording of the conference call will be available until 2 May 2014 at:
[phone] (calls outside Finland)
[phone] (calls inside Finland)
Access code: 943088

Rautaruukki Corporation
Taina Kyllönen
SVP, Marketing and Communications

Ruukki specialises in steel and steel construction. We provide customers with energy-efficient steel solutions for better living, working and moving. We have around 8,600 employees and an extensive distribution and dealer network across some 30 countries including the Nordic countries, Russia and elsewhere in Europe and the emerging markets, such as India, China and South America. Net sales in 2013 totalled EUR 2.4 billion. The company's share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS). www.ruukki.com

DISTRIBUTION:
NASDAQ OMX Helsinki
Main media
www.ruukki.com

Rautaruukki Interim Report Q1/2014

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Rautaruukki Oyj via Globenewswire

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