Ruukki's management opens up strategic focus ar...

Rautaruukki Corporation Stock exchange release 25 June 2013 at 12.30pm EEST

Rautaruukki's management will open up the strategic focus areas of the businesses and the actions taken to achieve them at the company's Capital Markets Day which started today in Hämeenlinna, Finland. Ruukki's aim is to accelerate its transformation into a company focusing on energy-efficient steel construction and special steels. The company aims at increase annual sales of special steel products to EUR 850 million in 2015 (2012: EUR 550 million). Ruukki Building Products is pursuing profitable growth especially by specialising in energy-efficient solutions in its product portfolio and from roofing products. The main goal for Ruukki Building Systems is to turnaround the business back to profitability by the end of the current year.

Today, at the company's Capital Markets Day taking place in Hämeenlinna, Finland, Rautaruukki's management will expand on the strategic focus areas and aims of the businesses and the actions taken to achieve those aims. Ruukki's aim is to accelerate its transformation into a company focusing on energy-efficient steel construction and special steels. To promote this transformation, this spring saw Ruukki restructure and, from the second quarter of the year onwards, the company reports its operations as three business areas:

Ruukki Building Products
Ruukki Building Systems
Ruukki Metals

 "Given the current market environment, we must significantly accelerate our transformation into a company focusing on energy-efficient steel construction and special steel products. We firmly believe that the strategic choices we have made and our efficiency actions currently under way will enable us to achieve this change. Acquisitions or divestments cannot be ruled out to achieve our target. Actions taken to this end are based on the assumption that no major changes for the better are expected in our business environment," says Sakari Tamminen, President & CEO.

"Our focus is on growing sales of special steels to EUR 850 million in 2015. We have the capacity to significantly increase the volume of our special steel products and at the same time to cut back on the volume of poor profitability standard steels. With an annual output of around 2.3 million tonnes at a capacity utilisation rate of around 80 per cent, we are of a right size and have the flexibility to specialise. Profitable growth in building products will be pursued by focusing on functional and energy-efficient products and by growing sales of roofing products, especially in Russia, Poland and the Nordic countries," Tamminen points out.

The projects under the efficiency programme Ruukki initiated last year have progressed as expected. It is estimated that the cost benefits totalling around EUR 100 million being pursued will be visible in full from the third quarter of this year onwards. Significant growth in sales volumes of special steel products, cutting down on the volume of standard steel products - where price competition is greater - and a focus on energy-efficient products utilising renewable energy in construction also create better conditions to retain the cost benefits achieved.

In special steel products, the sales growth target is based on their profitability being clearly higher than that of standard products. In addition, prices of special steel products are less volatile within business cycles. Ruukki has invested in special steels expertise and production capacity in recent years. At the same time, the company has achieved a good market position and customer base, and has also built a distribution system and strong product brands. These are good foundations on which to accelerate sales growth. Growth is also being pursued through new customer relationships and applications, new market areas and by launching new products. The special steels global sales network is being expanded by establishing new distribution channels and sales offices, as well as by recruiting over 40 experts to strengthen sales and technical customer support, especially in the growing markets of Asia, Africa and North and Latin America. The European network will also be strengthened. The aim is for a sales and partnership network covering all main market areas.

In standard steel products, the main goal is to further improve operational cost efficiency and to reorganise the product portfolio by cutting back on underperforming products. It is important to further develop customer-specific services, delivery accuracy and the entire supply chain to maintain and improve cost competitiveness. Ruukki's strength in the Nordic markets is its extensive service network. In addition, Ruukki is the only steel tube manufacturer in the Nordic countries with an extensive selection of tubular products and profiles to meet the needs of the construction and manufacturing industries. There are also growing opportunities to use special steel grades in tubular products.

In the Construction business, restructuring is aimed at improving profitability and growth, as well as to improve business manageability, the transformation pace and transparency. Construction is Ruukki's most important customer sector and accounts for around half of corporate sales.

Ruukki Building Products' competitive edges are a strong brand and distribution channels, together with a focus on energy-efficient products and on products which harness renewable energy. Ruukki Building Products' (roofing, wall panel, foundation and infrastructure products) profitability is, depending on product, at a good or a satisfactory level. To further improve profitability, Ruukki is focusing on repeatable products and on developing distribution and installation services for roofing products. The aim is robust, profitable growth in roofing products - especially in the Russian, Polish and Nordic markets - as well as to identify new business opportunities in the foundation and infrastructure product markets, and to increase the share of functional products in the product portfolio. Specialisation of the building components product portfolio into energy-efficient products, among others, will enable improved profitability. The most recent product launches are Ruukki Classic Solar thermal roof, which is flexibly designed for the roof of an ordinary single-family home, and Ruukki Solar panel, which produces solar power and can be installed on the walls of buildings.

Ruukki Building Systems' main aim is to turnaround the business back to profitability by the end of the current year. Poor performance by the business has been mainly attributable to single unprofitable project deliveries, loss making bridge operations, unused capacity and too high general and administrative costs. Ruukki Building Systems will be turned around to profitability by strengthening and improving the efficiency of project management, optimising production capacity and by completing the efficiency programme currently under way in line with targets. In addition, the business area has already withdrawn from bridge projects. Construction in Russia offers significant potential for profitable growth, especially in commercial and industrial construction and in agriculture. Work will continue on developing sales and the product portfolio in Russia driven by customer needs, as well as on improving the supply chain.

Growing demand for energy-efficient construction solutions create opportunites for companies such as Ruukki. Ruukki has established a new unit to develop energy-efficient, functional commercial buildings. This unit aims to create a foundation for future profitable growth by integrating the best of Ruukki's products and know-how. Ruukki's products can help to lower the energy and lifecycle costs of buildings and increase the value of a building.

Capital Markets Day presentations can be followed by live webcast on Ruukki's website at www.ruukki.com/Investors from around 12.20pm-4.30pm EEST. After the CMD, the presentations, in English, will be published in the Investor section of the company's website in the Reports and presentations archive.

For more information, please contact:
Sakari Tamminen, President & CEO, tel. [phone]
Markku Honkasalo, CFO, tel. [phone]

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 9,000 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 2012 totalled EUR 2.8 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

---

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Rautaruukki Oyj via Thomson Reuters ONE

HUG#1711782