Rautaruukki - Interim report (Q1 and Q3)

Rautaruukki Corporation Interim report Q1/2012: Order intake and cash flow continued to be good during the first quarter - the priority for 2012 is to improve profitability

Rautaruukki Corporation  Interim report 24 April 2012 at 9am EEST

January-March 2012 (Q1/2011)
- Net cash flow from operating activities was EUR 54 million (6).
- Order intake was up 2 per cent at EUR 686 million (674).
- Comparable net sales were up 4 per cent at EUR 699 million (675).
- Comparable operating profit was -EUR 15 million (25).
- Comparable result before taxes was -EUR 26 million (14).

Guidance for 2012 unchanged
Net sales in 2012 are estimated to grow about 5 per cent. Comparable operating
profit is estimated to improve compared to 2011.


KEY FIGURES
----------------------------------------------------------------------
                                                Q1/2012 Q1/2011   2011
----------------------------------------------------------------------
Comparable figures

Comparable net sales, EUR m                         699     675  2 797

Comparable operating profit,
EUR m                                               -15      25     56

Comparable operating profit
as % of net sales                                  -2.2     3.7    2.0

Comparable result before
income tax, EUR m                                   -25      14     22



Reported figures

Reported net sales, EUR m                           702     675  2 798

Reported operating profit,
EUR m                                               -16      25     22

Reported result before
income tax, EUR m                                   -26      14    -12



Net cash from operating activities, EUR m            54       6    114

Net cash before financing activities, EUR m          32     -29    -57

Earnings per share, EUR                           -0.14    0.06  -0.07

Return on capital employed
(rolling 12 months), %                             -0.6     2.7    1.3

Return on capital employed
(annualised), %                                    -2.7     5.0    1.3

Gearing ratio, %                                   68.0    50.3   60.4

Equity ratio, %                                    46.2    49.3   48.5

Personnel on average                             11 350  11 436 11 821
----------------------------------------------------------------------


President & CEO Sakari Tamminen:

The first quarter of 2012 began on a positive note, but uncertainty returned
towards the end of the report period when growth forecasts for China were
revised downwards and, in the eurozone, confidence in Spain and Italy's economic
growth weakened again. The good note during the first weeks saw a return to a
slower growth track towards the end of the quarter. However, the construction
season has got off to a good start in Ruukki and with higher average selling
prices in our steel business towards the end of the report period, I believe
that we are well placed for the rest of the year.

Strong cash flow, both year on year and quarter on quarter, was a positive
aspect at Ruukki during the first quarter. After capital expenditure, cash flow
was EUR 32 million in the black. Order intake was also up slightly compared to a
year earlier. Compared to the previous quarter, order intake was up 5 per cent,
which was attributable to the steel business in particular picking up. Our net
sales showed year-on-year growth of 4 per cent.

Our profitability was not at a satisfactory level. Operating profit rose quarter
on quarter, but weakened clearly compared to a year earlier, when our steel
business posted a good result. Average prices in the steel business declined
further at the start of the year, although began to rise towards the end of the
quarter. Also order intake prices rose steadily during the quarter. The
construction business improved year on year, but due to normal seasonality still
made a loss. Our engineering business improved slightly, but still showed a
loss.

We are now focusing on permanently improving the cost structure and level across
all our businesses, and on improving cost flexibility through efficiency
projects.

A project initiated in the steel business in February is aimed at a permanent
improvement of EUR 50 million in earnings performance. To date, around EUR 35
million in points for efficiency improvement have been identified in sales and
marketing, financial and HR administration, other support functions as well as
production, the use of raw materials and supplies, and in maintenance and other
services purchased. Of those points identified, actions having an impact of
around EUR 9 million are already ongoing and include, for example, improving the
efficiency of product transportation in Finland and the use of raw materials in
iron-making. To achieve the full target, the project will continue by reviewing
points for improvement already identified and by improving, among other things,
the performance of prefabrication and distribution operations. Decisions about
all actions to be initiated will be made by mid-May and we expect to achieve the
targeted improvement in earnings performance as a result.

We are also initiating a similar project in the construction business, where
improvement in operating profit has been too slow compared to volume growth. The
project aims to achieve a permanent improvement of EUR 20 million in earnings
performance. This will be achieved by, for example, optimising the supply chain
and material flows, as well as by improving the efficiency of sales and
marketing and support operations. Some of the actions, such as withdrawal from
unprofitable markets in Central Eastern Europe and defining the business model
in the project business, are already under way.

We have now increased our permanent improvement in earnings performance target
from EUR 50 million to a total of EUR 70 million. It is estimated that improved
operational efficiency will be visible in the form of improved earnings
performance starting 2012, but mainly during the first quarter of 2013 and in
full from the third quarter onwards.

On top of this, we have decided to discontinue manufacturing cabins and
components in Shanghai by the end of the third quarter. In future, our
engineering business will focus on developing its European operations in
Finland, Poland, Slovakia and Hungary. Ending cabin and component manufacturing
at the Shanghai unit will not significantly affect Ruukki Engineering's net
sales, but will improve profitability. The Shanghai unit posted a loss of EUR 7
million for 2011.

The presence of our steel business in China will be strengthened and a new steel
service centre will be set up in Shanghai using the machine capacity and
premises vacated by the engineering business. This is to speed up implementation
of our special steel strategy by strengthening sales of Ruukki Raex wear-
resistant steels and Ruukki Optim high-strength steels in China.

We expect demand for construction products to grow. Strongest growth is expected
in residential construction products, and in both the Russian and Polish
markets. In the engineering industry, we anticipate demand from mining industry
machinery and equipment manufacturers and demand from heavy cargo handling and
other materials handling equipment manufacturers to be at a good level. Order
intake, average prices and utilisation rates in the steel industry rose in
Europe during the first quarter due to improved market conditions at the end of
last year. We forecast that sales by our service centres will continue to be at
a good level and that direct mill deliveries will pick up somewhat. Stock levels
in the steel industry are at a normal level compared to sales and we expect a
moderate rise in average selling prices of steel products.

We repeat our guidance for 2012. Net sales are estimated to grow about 5 per
cent. Comparable operating profit is estimated to improve compared to 2011.



Rautaruukki Corporation's full interim report for January-March 2012 is attached
to this release.

For further information, please contact:
Sakari Tamminen, President & CEO, tel. +358 20 592 9075
Markku Honkasalo, CFO, tel. +358 20 592 8840

Rautaruukki will host two news conferences on Tuesday 24 April at Restaurant
Palace, Merisali Cabinet, Eteläranta 10, 00130 Helsinki

A presentation for analysts in English will be held starting at 10.30am EEST.

A live webcast of the presentation may be followed online on the company's
website at www.ruukki.com/Investors. The event can also be followed through a
conference call by dialling the number below 5-10 minutes before the scheduled
time:
+44 20 7162 0025 (calls outside Finland)
09 2313 9201 (calls inside Finland)
Access code: 914137

A replay of the webcast can be viewed on the company's website from
approximately 2pm EEST. A replay of the conference call will be available until
1 May 2012 at:
+44 20 7031 4064 (calls outside Finland)
09 2314 4681 (calls inside Finland)
Access code: 914137

A press conference for the media in Finnish will be held at 12 noon EEST.

Rautaruukki Corporation
Taina Kyllönen
SVP, Marketing and Communications

Ruukki provides its customers with energy-efficient steel solutions for better
living, working and moving. Ruukki operates in some 30 countries and employs
around 11,800 people. Net sales in 2011 totalled EUR 2.8 billion. The company's
share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS).

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


[HUG#1605264]

Attachments:

Rautaruukki Corporation Interim report Q1/2012.pdf