Rautaruukki - Interim report (Q1 and Q3)

Rautaruukki Interim report Q1-Q3/2012: Third-quarter loss due to the steel business - comparable operating profit for H2 of the year estimated to be weaker than for H1. Cash flow improved clearly.

Rautaruukki Corporation Stock exchange release 23 October 2012 at 9am EEST

Rautaruukki Corporation Interim report Q1-Q3/2012: Third-quarter loss due to the
steel business -  comparable operating profit for the second half of the year
estimated to be weaker than for the first. Cash flow improved clearly.

July-September 2012 (Q3/2011)
- Order intake was down 1 per cent at EUR 675 million (678).
- Comparable net sales were EUR 674 million (674).
- Comparable operating profit was -EUR 18 million (1), equating to -3 per cent
of comparable net sales.
- Comparable result before income taxes was -EUR 29 million (-4).
- Net cash from operating activities was EUR 44 million (-62).

January-September 2012 (Q1-Q3/2011)
- Order intake was up 5 per cent at EUR 2,116 million (2,024).
- Comparable net sales were up 2 per cent at EUR 2,113 million (2,079).
- Comparable operating profit was -EUR 26 million (96), equating to -1 per cent
of comparable net sales.
- Comparable result before income taxes was -EUR 55 million (72).
- Net cash from operating activities was EUR 93 million (-49).

Guidance for 2012 changed: Revised guidance: Net sales in 2012 are estimated to
remain at the same level as the previous year. Comparable operating profit for
the second half of the year is estimated to be weaker than for the first half.
Cash flow for the whole year is expected to be clearly better than the previous
year. Earlier guidance: Net sales in 2012 are estimated to remain at the same
level as the previous year. Comparable operating profit for the second half of
the year is estimated to remain at the same level as for the first half. This
means negative comparable operating profit for the whole year. Cash flow for the
whole year is expected to improve on the situation at the end of June and to be
clearly better than the previous year.

 KEY FIGURES
-------------------------------------------------------------------------------
                                          Q3/12  Q3/11 Q1-Q3/12 Q1-Q3/11   2011
-------------------------------------------------------------------------------
 Comparable figures

 Comparable net sales, EUR m                674    674    2,113    2,079  2,797

 Comparable operating profit,
 EUR m                                      -18      1      -26       96     56

 Comparable operating profit
 as % of net sales                         -2.7    0.1     -1.2      4.6    2.0

 Comparable result before
 income tax, EUR m                          -29     -4      -55       72     22

 Reported figures

 Reported net sales, EUR m                  675    675    2,119    2,080  2,798

 Reported operating profit, EUR m           -20    -24      -41       69     22

 Reported result before
 income tax, EUR m                          -31    -29      -70       45    -12

 Net cash from operating activities, EUR
 m                                           44    -62       93      -49    114

 Net cash before financing activities,
 EUR m                                       20   -119       22     -182    -57

 Earnings per share, EUR                  -0.21  -0.15    -0.43     0.22  -0.07

 Return on capital employed
 (rolling 12 months), %                                    -3.9      3.3    1.3

 Return on capital employed
 (annualised), %                                           -3.8      4.5    1.3

 Gearing ratio, %                                          71.4     68.2   60.4

 Equity ratio, %                                           45.6     47.5   48.5

 Personnel on average                    11,345 12,111   11,462   11,930 11,821
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President & CEO Sakari Tamminen:

The global economic outlook darkened during the third quarter. The uncertainty
resulting from the European sovereign debt crisis continued and economic growth
slowed in China. A downgrading of global economic growth forecasts has reduced
confidence in the economy and fuelled uncertainty. At Ruukki, this was reflected
especially in the fall in investment-decision-driven demand. As regards Ruukki's
important market areas, economic growth in Russia is likely to continue to be
favourable also for the rest of the year. Likewise, economic growth also in
Ruukki's home markets, the Nordic countries, is expected to remain relatively
stronger than in many European countries.

Ruukki posted a loss for the third quarter mainly because of weak performance in
the steel business, but also the results of our other business areas were below
those reported a year earlier. Comparable operating profit during the previous
quarter became a EUR 18 million operating loss during the third quarter.
However, on a brighter note, cash flow from operations was good and showed clear
improvement year on year at EUR 93 million and was EUR 22 million positive after
capital expenditure. Consolidated net sales were at the same level as a year
earlier.

Order intake was practically at the same level as a year earlier, but was 11 per
cent down compared to the previous quarter. This was due to a weakening of the
growth outlook also in the main construction market areas during the third
quarter. We have also focused on higher margin orders in building projects,
which has been reflected in lower order volumes.

In the prevailing uncertain market environment, the past quarter clearly shows
the necessity of the efficiency improvement projects we initiated earlier in the
year in our steel and construction businesses. The projects have continued to
progress somewhat better than we previously anticipated and we currently expect
to achieve the targeted savings of around EUR 100 million through efficiency
actions. On top of the efficiency programme already underway, we have initiated
analyses to improve efficiency also in corporate administration.

We now estimate the new supply contracts for raw materials will result in cost
benefits totalling over EUR 30 million, instead of EUR 20 million as stated
earlier. These cost benefits will be reflected in full during the second half of
the year. During the third quarter, however, the benefits were still minor.

Whereas the downgrading of economic growth was reflected in commercial and
industrial construction, which depends on investment decisions, this was not the
case in residential construction, which depends on consumer demand. Order intake
and net sales of our roofing products were up 16 per cent year on year. The
decrease in building permits granted in Finland and Sweden during the spring was
visible as a clear fall in infrastructure construction orders and deliveries.
This had a negative impact also on the profitability of our construction
business. Order intake in the commercial and industrial construction project
business was strong during the first half of the year and the margin level in
new orders shows a clear improvement compared to a year earlier. However, this
is not yet visible in the figures for the third quarter because delivery of most
of these projects is scheduled to begin during the fourth quarter of this year
and the first quarter of next.

After the July-August holiday period, buyers have traditionally returned to the
steel market and as a result delivery volumes have picked up. This has not been
the case in this year's very uncertain market environment and with falling
prices of raw materials, and thus customers were mostly destocking. Selling
prices were slightly down compared to the second quarter of the year. Weak
market conditions and normal seasonality meant that production and delivery
volumes were below those seen during the second quarter. Especially as far as
standard steels are concerned, customer's order behaviour continued to be
uncertain and order times remained very short. Because of weakened market
conditions and normal July maintenance shutdowns, the capacity utilisation rate
in our steel business averaged 76 per cent.

As we announced in our stock exchange release last week, in future we intend to
focus on developing our construction and special steels businesses. Our
agreement with CapMan to combine units in our engineering business with Komas to
form a new company, Fortaco, was a natural step for us. Engineering industry
sub-suppliers are expected to provide increasingly stronger cost-competitiveness
in component deliveries as well as specialised know-how. This new combination
will have efficient component production units located near the customers'
markets. It will be Europe's leading actor in its field. For us, success of the
new company is important as regards both the development in steel volumes and
the expected return on invested capital.

The construction market offers substantial growth potential, especially in
Russia and in Eastern Europe. We also see good business opportunities in
residential roofing and the construction of energy-efficient buildings,
particularly in Northern Europe. In the special steels business, we will
continue to expand our international distribution and service network.

Our guidance for the current year has been changed. Net sales in 2012 are
estimated to remain at the same level as the previous year. Comparable operating
profit for the second half of the year is now estimated to be weaker than for
the first half. Cash flow for the whole year is expected to be clearly better
than the previous year.

Rautaruukki Corporation's full interim report for January-September 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

News conference for analysts and the media

A joint news conference in English both for analysts and the media will be
hosted on Tuesday 23 October at 10.30am at Ruukki, 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:
+44 20 7162 0077 (calls outside Finland)
+358 9 2313 9201 (calls inside Finland)
Access code: 914151

A replay of the webcast can be viewed on the company website at approximately
4pm EEST. A replay of the conference call will be available until 30 October
2012 at:
+44 20 7031 4064 (calls outside Finland)
+358 9 2314 4681 (calls inside Finland)
Access code: 914151

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#1651358]

Attachments:

Rautaruukki_interimreport_Q3_2012.pdf