2007-04-25 08:00:00 CEST
2007-04-25 08:00:00 CEST
REGULATED INFORMATION
Rautaruukki - Quarterly report
RAUTARUUKKI CORPORATION INTERIM REPORT JANUARY-MARCH 2007
Rautaruukki Oyj Stock Exchange Release 25 April 2007 at 9 am
RAUTARUUKKI CORPORATION INTERIM REPORT JANUARY-MARCH 2007
The market in Rautaruukki's core market areas and principal customer industries
remained healthy during the early part of the year. Brisk construction activity
continued in the Nordic countries, Central Eastern Europe, Russia and Ukraine.
The order books of engineering customers are still firm and this has been
positively reflected in the company's deliveries. Likewise, demand for standard
steel products has held up well in Northern Europe throughout the period under
review.
Net sales and result for January-March 2007 (comparable figures for Q1/2006)
Consolidated net sales in January-March 2007 were up 11 per cent to EUR 950
million (856). This represents a rise of 21 per cent on comparable net sales of
EUR 786 million for January-March 2006. The comparable figures exclude the
Nordic Reinforcing units, which were part of the Group until 31 July 2006.
Ruukki Construction's net sales were up by 60 per cent to EUR 213 million (133).
Ruukki Engineering's net sales were EUR 167 million (132) and Ruukki Metals' EUR
570 million (591).
The solutions businesses - Ruukki Construction and Ruukki Engineering -
accounted for 40 per cent (31) of net sales during the period under review. Of
net sales, 82 per cent (78) came from our core market areas: 31 per cent (32)
from Finland, 34 per cent (35) from the other Nordic countries and 18 per cent
(11) from Central Eastern Europe, Russia and Ukraine. The rest of Europe
accounted for 16 per cent (20) of net sales and other countries for 2 per cent
(2).
Operating profit for the period under review was EUR 178 million (95), which is
19 per cent (11) of net sales. This is double the comparable operating profit of
EUR 89 million reported last year. The solutions businesses accounted for 36 per
cent (34) of consolidated operating profit. Ruukki Construction's operating
profit rose to EUR 33 million (8) and that of Ruukki Engineering to EUR 32
million (25). Likewise, Ruukki Metals operating profit rose to EUR 119 million
(77).
Net finance expense totalled EUR 2 million (6). Net interest expense was down
from EUR 5 million last year to EUR 0.3 million owing to a marked decrease in
net indebtedness.
The share of associates' profits was EUR 1 million (13, of which Ovako accounted
for EUR 12 million).
Profit before taxes was EUR 177 million (101).
Group taxes amounted to EUR 45 million (24), including a change in deferred
taxes of -EUR 4 million (2). The effective tax rate was 26 per cent (27).
Profit for the period under review was EUR 131 million (77).
Diluted earnings per share were EUR 0.95 (0.56).
The return on capital employed over the past 12 months was 37.8 per cent (29.5)
and the return on equity was 36.2 per cent (30.0).
Balance sheet
The consolidated balance sheet total rose by EUR 289 million compared to 31
March 2006. Since year-end 2006, the balance sheet total was up by EUR 88
million to EUR 3,114 million.
Consolidated equity at 31 March 2007 was EUR 1,663 million (1,408) and net
liabilities -EUR 23 million (276).
Cash flow and financing
Cash flow from operating activities was EUR 68 million (101) and cash flow after
investing activities was EUR 45 million (84).
Net interest-bearing liabilities at 31 March 2007 were -EUR 23 million (276),
compared to EUR 22 million at year-end 2006. Working capital increased by EUR
100 million (decrease of 6) during the first quarter of 2007. Half of this
increase was attributable to a seasonal growth in inventories.
The equity ratio was 54.5 per cent (50.2) and net gearing -1.4 per cent (19.6).
At 31 March 2007, the Group had liquid assets of EUR 399 million and a total of
EUR 300 million of unused revolving credit facilities with banks. At 31 March
2007, shareholders' equity stood at EUR 1,663 million (1,408), or EUR 12.00 per
share (10.31). Dividends totalling EUR 276 million - EUR 1.50 and an additional
dividend of EUR 0.50 per share - declared by the Annual General Meeting held in
March, were debited from equity and credited to current liabilities. Dividends
were paid on 4 April 2007.
Personnel
During the first quarter of 2007, the Group employed an average of 13,258 people
(11,903). At 31 March 2007, the headcount was 13,348 (11,981), an increase of
1,367 persons.
Structural changes
Completed in January 2007, the acquisition of Omeo Mekaniska Verkstad AB of
Sweden has strengthened the company's position as a systems supplier to
customers in the lifting, handling and transportation equipment industry. The
shares were acquired debt-free for around EUR 4 million. Omeo has 55 employees
and is expected to report net sales of some EUR 23 million for the financial
year ending in April 2007. The company has been accounted for in Rautaruukki's
consolidated financial statements as of 1 February 2007.
Omeo, together with Hungarian company Aprítógépgyár (AGJ) acquired after the
period under review, supports Rautaruukki's growth strategy in the lifting,
handling and transportation equipment customer segment. These acquisitions add
to our components and systems deliveries, especially in ready-to-install booms,
and benefit us in the form of significant new customers in Central Europe.
In February 2007, Rautaruukki strengthened its position as a supplier of steel
structure bridges in the Nordic countries through the acquisition of the entire
share capital of Norwegian company Scanbridge AS for a debt-free purchase price
of around EUR 6 million. The acquisition was completed on 2 April 2007 and adds
to the company's expertise, particularly in the manufacture and installation of
bridge structures. Scanbridge had net sales of some EUR 9 million in 2006 and
employs 75 persons. Scanbridge will be accounted for in Rautaruukki's
consolidated financial statements as of 1 April 2007.
Capital expenditure
Capital expenditure on tangible and intangible assets totalled EUR 26 million
(21) during the first quarter of 2007. During the period under review, disposals
of property plant and equipment amounted to EUR 3 million (1). Capital
expenditure on tangible and intangible assets in 2007 is expected to exceed EUR
200 million.
EUR 4 million was spent on M&A arrangements during the period under review.
Property, plant and equipment obtained through acquisitions rose by EUR 1
million, working capital by EUR 1 million and goodwill by EUR 1 million.
In February 2007, a decision was taken to expand and develop both the
manufacture of steel frame structures and profiled products for the construction
of commercial premises, as well as the company's service centre operations in
Poland. The investments total around EUR 19 million and will add to the
company's abilities to serve customers and to deliver construction systems and
metal products. The investments will be made during 2007.
Also in February 2007, a decision was taken to expand the production in Finland
of frame structures for bridges and buildings. A start was made on carrying out
the investments, worth around EUR 6 million, during the period under review. The
investments will be complete during the last quarter of the year.
March 2007 saw the start of construction work on a plant in Romania, which will
manufacture frames, wall elements and profiles. The total investment is around
EUR 35 million and production is expected to come on stream progressively
towards the end of 2007 as originally planned. Work is also underway on a EUR 15
million project to construct a plant in Ukraine. Once these investments are up
and running, the company will be able to significantly increase its deliveries
of components and integrated solutions for commercial and industrial
construction to customers in Ukraine, Romania and Bulgaria.
2007 Annual General Meeting
Rautaruukki Corporation's Annual General Meeting was held in Helsinki on 20
March 2007.
The Annual General Meeting approved the reappointment of Mr Jukka Viinanen as
chairman of the Board of Directors and the appointment of Mr Reino Hanhinen as
deputy chairman. Ms Maarit Aarni-Sirviö, Mr Christer Granskog, Ms Pirkko Juntti
and Mr Kalle J. Korhonen were all reappointed as members of the Board of
Directors. Mr Jukka Härmälä, President & CEO of Stora Enso Corporation, and Ms
Liisa Leino, chairwoman of the Board of Leinovalu Oy,
were appointed as new members of the Board. The Board of Directors elected
members of the committees from among its number. Ms Pirkko Juntti was re-elected
to chair the Audit Committee and Mr Christer Granskog and Liisa Leino were
elected as members. Mr Jukka Viinanen was re-elected to chair the Compensation
Committee and Mr Reino Hanhinen and Mr Jukka Härmälä were elected as members.
Mr Turo Bergman and Mr Jouko Skinnari were reappointed as chairman and deputy
chairman respectively of the Supervisory Board. Mr Heikki Allonen, Ms Inkeri
Kerola, Ms Miapetra Kumpula-Natri, Mr Petri Neittaanmäki, Mr Markku Tynkkynen,
Mr Tapani Tölli and Mr Lasse Virén were all reappointed as members of the
Supervisory Board.
The Annual General Meeting reappointed public accountants Ernst & Young Oy, with
Mr Pekka Luoma Authorised Public Accountant as the principal auditor.
Moreover, the Annual General Meeting passed a resolution to establish a
Nomination Committee to prepare proposals for the following Annual General
Meeting regarding members of the Board of Directors and directors' remuneration.
The Annual General Meeting authorised the Board of Directors to resolve to
purchase a maximum of 12,000,000 of the company's shares (8.57 per cent of the
total number of shares). The authorisation is valid for 18 months from the
decision of the Annual General Meeting.
Additionally, the Annual General Meeting authorised the Board of Directors to
resolve to dispose of a maximum of 13,785,381 treasury shares. The authorisation
is valid until the close of the 2009 Annual General Meeting.
The Annual General Meeting approved the proposal by the Board of Directors to
amend the Articles of Association. The article defining the company's business
was expanded upon to better reflect the company's current activities. The
provisions on the company's minimum and maximum share capital and the number of
shares were removed. The division of the company's shares into Series K and
Series A shares was discontinued and the company subsequently has only one
series of share. The sections on the quorum of the Board of Directors and the
Supervisory Board, the Boards' term of office and the procedure related to the
minutes of their meetings were removed. The duties of the Board of Directors and
of the President & CEO were specified in accordance with the provisions of the
Companies Act regarding their general authority. The duties of the Supervisory
Board were specified. Article 21 concerning the obligation to redeem shares was
removed. Furthermore, the Articles of Association were amended due to the fact
that certain provisions were also contained in the new Companies Act and to
bring the wording into line with the terminology used in the new act. The new
Articles of Association entered into force on 5 April 2007.
Dividend
The Annual General Meeting held on 20 March 2007 decided that a dividend of EUR
1.50 per share, and an additional dividend of EUR 0.50 per share on the capital
gain arising from the sale of the shares in associated company Ovako, be paid
for 2006. The dividend, to a total amount of EUR 276 million, was paid on 4
April 2007.
Shares and share capital
During the first three months of 2007, Rautaruukki Oyj shares were traded for a
total of EUR 1,896 million (1,317) on the Helsinki Stock Exchange. The highest
price quoted was EUR 38.10 in February and the lowest was EUR 27.38 in January.
The volume weighted average share price was EUR 33.51 and the share closed at
EUR 34.89 at the end of the period under review. At 31 March 2007, the company
had a market capitalisation of EUR 4,887 million (4,233).
The company's registered share capital at 31 March 2007 was EUR 238.1 million
distributed across 140,073,340 shares.
On 20 March 2007, under the authorisation of the Board of Directors, the company
transferred 84,000 treasury shares to persons covered by the Group's share bonus
scheme. Subsequent to this, the company has 1,701,381 treasury shares, which, at
31 March 2007, had a market value of EUR 59 million.
The Board of Directors has not exercised the authorisation to purchase the
company's own shares during the first quarter of 2007.
Employee warrants based on the 2003 bond loan with warrants have been publicly
traded on the Helsinki Stock Exchange since 24 May 2006. One warrant entitles
the holder to subscribe one Rautaruukki share at a price of EUR 1.70. By 31
March 2007, warrants had been exercised to subscribe a total of 1,186,895
shares. The outstanding warrants entitle subscription to a total of 213,105
shares. The subscription period expires on 23 May 2009.
At the end of the period under review, the Board of Directors had no valid
authorisations to issue convertible bonds or bonds with warrants or to increase
the company's share capital.
Environmental issues
The company's Raahe Works and the steam boilers at the Hämeenlinna Works in
Finland fall within the scope of the EU's internal emissions trading scheme
launched in 2005. The steel section mill in Mo i Rana, Norway, comes under a
similar Norwegian emissions trading scheme. Verified carbon dioxide emissions in
2006 were 4.85 million tonnes.
In the initial allocation of emissions trading allowances, the company received
a total of 18.6 million allowances for the first three-year trading period,
2005-2007. In conjunction with corporate divestments, 3.2 million allowances
were transferred to Oy Ovako AB in 2005 and 0.2 million allowances to BT Norway
AS in 2006 in connection with divestment of the Nordic reinforcing steel
business. Verified carbon dioxide emissions, excluding Ovako, for 2005 were 4.83
million tonnes, of which the share of the operations transferred to BT Norway AS
accounted for 0.05 million tonnes. Rautaruukki sold emissions allowances for EUR
3 million in 2006. The difference between actual emissions and emissions based
on initial allocations will not be finally determined until the end of the three
year trading period, 2005-2007. From the business aspect, the company is not
expected to incur significant costs as a result of emissions trading during the
current three year period.
Improvement in cost-effectiveness
Ruukki United, the company's programme to harmonise ways of working and improve
efficiency, aims to achieve cost savings, compared to 2004 levels, of around EUR
150 million by year-end 2008. EUR 56 million of this target had been achieved by
the end of the period under review.
The Ruukki United programme also seeks to permanently free up some EUR 150
million of capital by year-end 2008. EUR 69 million of this target had been
achieved by the end of the period under review.
Impacts of the programme on staffing levels are ascertained on a
project-specific basis and any reductions are expected to be made mostly through
retirement and relocation.
Events taking place after the period under review
The competition authorities gave the green light for the Scanbridge acquisition
in March and the transaction was closed on 2 April 2007. The shares were
acquired for a debt-free purchase price of around EUR 6 million.
In April 2007, Rautaruukki signed an agreement to acquire a majority holding in
Hungarian company Aprítógépgyár Zrt. (AGJ). AGJ's core business is the
manufacture of components, such as booms, for use in earthmoving machinery and
material handling equipment. AGJ had net sales in 2006 of around EUR 43 million
and employs some 740 persons. The transaction still requires the approval of the
competition authorities. The transaction is expected to be closed during May.
Near-term outlook
The market in the Group's core market areas and in key customer industries is
expected to continue to hold up well. Construction activity is expected to
remain brisk across the entire market area. It is anticipated the construction
market in Eastern Europe will grow at a faster rate than in other areas. Demand
from engineering industry customers is likely to remain strong in the lifting,
handling and transportation equipment industry, as well as in the energy,
shipbuilding and offshore sectors. The market for steel products in the Group's
core market areas is expected to remain firm. The most significant factors of
uncertainty relate to overall development of the global economy.
Comparable net sales in 2007 are expected to develop in line with growth targets
set. Operating profit for 2007 is anticipated to markedly exceed the comparative
figure for last year.
This interim report is unaudited.
Helsinki, 25 April 2007
Rautaruukki Corporation
Board of Directors
DIVISIONS
Ruukki Construction
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| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 |
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| Net sales | 133 | 181 | 244 | 271 | 829 | 213 |
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| Operating profit | 8 | 21 | 33 | 39 | 101 | 33 |
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| as % of net sales | 6 | 12 | 14 | 14 | 12 | 15 |
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During the first quarter of 2007, Ruukki Construction had net sales of EUR 213
million (133), up by 60 per cent on the corresponding figure a year earlier.
Operating profit rose to EUR 33 million (8). The division accounted for 22 per
cent (16) of consolidated net sales. Higher net sales and operating profit were
driven by strong construction activity in our core market, a healthy market
fostered by a mild winter, greater delivery capability through acquisitions and
investments made in 2006 and more effective business processes.
Construction activity remained brisk in all core markets. Demand for components,
systems and total deliveries held up extremely well and deliveries rose in all
market areas. Milder weather resulted in a less marked seasonal fluctuation than
we are used to. To take a case in point, foundation construction in
infrastructure construction was still progressing apace even in January. In
Russia, growth in sales and total deliveries was also attributable to the
geographical expansion of the sales network carried out in late 2006.
In Central Eastern Europe and Russia, total deliveries in particular remained on
a strong growth track. Design and delivery capacity were strengthened in Central
Eastern Europe in response to vigorous demand. In the Nordic countries and
Baltics, there was a broad spectrum in the demand for total deliveries ranging
from shopping and logistics centres to sports complexes and industrial
buildings. The transport infrastructure market is also opening up to total
deliveries.
February 2007 saw the announcement of the acquisition of the Norwegian company
Scanbridge AS, the leading supplier of total deliveries of steel bridge
structures in the Nordic countries. The transaction was closed in April 2007 and
strengthens Rautaruukki's expertise and service capability in large bridge
projects and its capability in bridge installation.
The division has responded to strong demand in building construction by
expanding output of frame structures and profiled products in both Finland and
Poland. The investments will add to the company's capabilities to serve
customers and to deliver construction systems and metal products.
March 2007 saw the start of construction work on a plant in Romania, which will
manufacture frames, wall elements and profiles. Production is expected to come
on stream towards the end of the year. Work is also underway on a construction
project in Ukraine. Once these investments are up and running, the company will
be able to significantly increase its deliveries of components and integrated
solutions for commercial and industrial construction to customers in Ukraine,
Romania and Bulgaria.
The capacity of the Obninsk and Balabanovo plants will be stepped up to meet
growing demand in Russia. Totalling around EUR 30 million, these machinery and
equipment investments will enable the plants to increase deliveries of frame and
façade structures and integrated systems. At the same time, the investments will
boost the share of total deliveries also in Ukraine. The investments are
expected to triple the plants' delivery capability by year-end 2009.
Ruukki Engineering
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| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 |
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| Net sales | 132 | 142 | 127 | 157 | 557 | 167 |
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| Operating profit | 25 | 21 | 28 | 33 | 106 | 32 |
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| as % of turnover | 19 | 15 | 22 | 21 | 19 | 19 |
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During the first quarter of 2007, Ruukki Engineering had net sales of EUR 167
million (132), up by 27 per cent on the corresponding figure a year earlier.
Higher net sales were attributable to the continued good market. The division
accounted for 18 per cent (15) of consolidated net sales. Operating profit rose
to EUR 32 million (25).
Order books continued to show strength in all Ruukki Engineering customers'
sectors. The order books of customers in the lifting, handling and
transportation equipment industry have been positively reflected in
Rautaruukki's deliveries. Rapid growth in the use of wind power in energy
generation is also in evidence at Rautaruukki in the form of growing deliveries
of welded components for wind farms. Demand in the paper and wood processing
industry has remained strong. Likewise, order books in the shipbuilding and
offshore sectors are extremely healthy.
Completed in January 2007, the acquisition of Omeo Mekaniska Verkstad AB of
Sweden has strengthened the company's position as a systems supplier to
customers in the lifting, handling and transportation equipment industry. Omeo
supplies ready-to-install booms for material handling equipment. April 2007 saw
Rautaruukki sign an agreement to acquire a majority holding in Aprítógépgyár
Zrt. (AGJ) in Hungary. AGJ manufactures heavy machinery as well as components,
including booms, for use in earthmoving machinery and materials handling
equipment.
Omeo, together with AGJ, supports Rautaruukki's growth strategy in the lifting,
handling and transportation equipment customer segment. These acquisitions add
to our components and systems deliveries, especially in ready-to-install booms,
and benefit us in the form of significant new customers in Central Europe.
In the wake of increased demand for cabins, cabin assembly began and a new paint
shop came on stream at the Wroclaw unit in Poland.
Ruukki Metals
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| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 |
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| Net sales | 591 | 604 | 514 | 583 | 2 291 | 570 |
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| Operating profit | 77 | 87 | 89 | 111 | 364 | 119 |
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| as % of net sales | 13 | 14 | 17 | 19 | 16 | 21 |
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During the first quarter of 2007, Ruukki Metals had net sales of EUR 570 million
(591), up by 10 per cent against the comparable figure of EUR 521 million a year
earlier. The comparable figure excludes the Nordic Reinforcing units, which were
part of the business until 31 July 2006. Operating profit was up 54 per cent to
EUR 119 million (77). Comparable operating profit for the corresponding period a
year earlier was EUR 71 million. Higher profitability is attributable to
strengthening sales prices and a change in the sales structure. The division
accounted for 60 per cent (69) of consolidated net sales.
Demand has remained firm in the division's core market areas and customer
segments. Prices of steel products continued to firm up and demand was
particularly good for hot-rolled, plate and colour-coated products. Strong
demand means long delivery times for certain products.
In Central Europe, further progress was made with developing the sales structure
and focusing on deliveries of special products.
A decision was taken in February 2007 to relocate the service centre in Zyrardów
in Poland to the panel and steel structure plant in Oborniki. This will
strengthen the company's ability to serve customers and to deliver construction
systems and metal products. In the same context, the service centre will expand
and diversify its prefabrication capacity to support the company's delivery
capability in special products. The Gliwice distribution centre in Poland was
also brought into full use.
Ruukki Production
--------------------------------------------------------------------------------
| 1000 tonnes | Q1/06 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 |
--------------------------------------------------------------------------------
| Steel production | 888 | 860 | 725 | 744 | 3 217 | 703 |
--------------------------------------------------------------------------------
| Steel production | 709 | 693 | 705 | 744 | 2 853 | 703 |
| in Raahe | | | | | | |
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Production ran normally at all works. Steel output during the first quarter of
2007 was 703,000 tonnes. The comparable figure for 2006, excluding the Mo i Rana
reinforcing steel production divested, was 709,000 tonnes.
Prices of raw materials during the first three months of 2007 were similar to
those a year earlier, but are expected to rise somewhat from the end of the
second quarter onwards. Hedging agreements ensure a more modest rise in zinc and
electricity prices than the rise on the world market. Long-term delivery
contracts ensure the availability of raw materials.
January 2007 saw Rautaruukki and LKAB of Sweden sign a long-term contract for
the supply of iron ore pellets used as a raw material in iron production at the
Raahe Works. This long-term contract will ensure the availability of
high-quality iron ore at the Raahe Works.
Investments currently underway to strengthen delivery capability of
high-strength steels progressed as planned. A decision was made in February 2007
to invest in the plate mill in Raahe to increase delivery capability of
high-strength and wear-resistant steels. These investments particularly support
Ruukki Engineering's business in the growing lifting, handling and
transportation equipment industry and also enable Ruukki Metals to increase the
share of sales of high-strength steels.
After modernisation, the coating line in Kankaanpää in Finland came on stream in
February 2007. The product range of the coating line in Antratsyt in Ukraine was
expanded in response to market needs. The coating lines in both Kankaanpää and
Antratsyt especially serve construction customers.
TABLES
This interim report has been prepared in accordance with IAS 34 and is in
conformity with the accounting policies published in the annual financial
statements.
Individual figures and totals appearing in the tables have been rounded to the
nearest full million of euros. This means that they will not always tally when
added together or subtracted. The figures given in tables are unaudited.
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| SUMMARY CONSOLIDATED INCOME STATEMENT |
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| EUR million | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Net sales | 950 | 856 | 3 682 |
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| Other operating income | 4 | 5 | 32 |
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| Operating expenses | -739 | -729 | -3 037 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and | -38 | -37 | -148 |
| impairment losses | | | |
--------------------------------------------------------------------------------
| Operating losses | 178 | 95 | 529 |
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| Finance income and expense | -2 | -6 | -22 |
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| Share of results of associated | 1 | 13 | 129 |
| companies | | | |
--------------------------------------------------------------------------------
| Profit before taxes | 177 | 101 | 635 |
--------------------------------------------------------------------------------
| Taxes | -45 | -24 | -134 |
--------------------------------------------------------------------------------
| Profit for the period | 131 | 77 | 501 |
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity shareholders of the parent | 131 | 77 | 501 |
--------------------------------------------------------------------------------
| Minority interests | 0 | 0 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | 0,95 | 0,56 | 3,65 |
--------------------------------------------------------------------------------
| Basic earnings per share, EUR | 0,95 | 0,57 | 3,66 |
--------------------------------------------------------------------------------
| Operating profit as % of net sales | 18,7 | 11,1 | 14,4 |
--------------------------------------------------------------------------------
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| SUMMARY CONSOLIDATED BALANCE SHEET | 31 Mar | 31 Mar | 31 Dec |
--------------------------------------------------------------------------------
| EUR million | 2007 | 2006 | 2006 |
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| ASSETS | | | |
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| Non-current assets | 1 449 | 1 439 | 1 454 |
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| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 644 | 473 | 586 |
--------------------------------------------------------------------------------
| Trade and other receivables | 622 | 559 | 624 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 399 | 179 | 361 |
--------------------------------------------------------------------------------
| Non-current assets available for | 0 | 174 | 0 |
| sale* | | | |
--------------------------------------------------------------------------------
| | 3 114 | 2 825 | 3 026 |
--------------------------------------------------------------------------------
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| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
| Equity | | | |
--------------------------------------------------------------------------------
| Equity attributable to | 1 663 | 1 408 | 1 832 |
| shareholders of the parent | | | |
--------------------------------------------------------------------------------
| Minority interests | 1 | 1 | 1 |
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| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 212 | 360 | 218 |
--------------------------------------------------------------------------------
| Other | 209 | 221 | 226 |
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| Current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 163 | 108 | 164 |
--------------------------------------------------------------------------------
| Trade payables and other | 865 | 672 | 584 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Liabilities related to non-current | 0 | 56 | 0 |
| assets available for sale* | | | |
--------------------------------------------------------------------------------
| | 3 114 | 2 825 | 3 026 |
--------------------------------------------------------------------------------
| * In the comparable information, the Group has classified the Nordic |
| reinforcing steel business as non-current assets available for sale. In |
| April 2006, Rautaruukki signed an agreement to sell this business. |
--------------------------------------------------------------------------------
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| SUMMARY CASH FLOW STATEMENT | | | |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Profit for the period | 131 | 77 | 501 |
--------------------------------------------------------------------------------
| Adjustments | 84 | 54 | 168 |
--------------------------------------------------------------------------------
| Cash flow before change in working | 215 | 131 | 669 |
| capital | | | |
--------------------------------------------------------------------------------
| Change in working capital | -100 | 6 | -76 |
--------------------------------------------------------------------------------
| Financing items and taxes | -47 | -36 | -197 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | 68 | 101 | 396 |
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| Cash flow from investing activities | -23 | -17 | 140 |
--------------------------------------------------------------------------------
| Cash flow before financing activities | 45 | 84 | 536 |
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| Dividends paid | 0 | 0 | -191 |
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| Other net cash flow from financing | -7 | -51 | -147 |
| activities | | | |
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| Change in cash and cash equivalents | 38 | 33 | 198 |
--------------------------------------------------------------------------------
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| KEY FIGURES | Q1/07 | Q1/06 | 2006 |
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| Net sales, EUR m | 950 | 856 | 3 682 |
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| Operating profit, EUR m | 178 | 95 | 529 |
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| as % of net sales | 18.7 | 11.1 | 14.4 |
--------------------------------------------------------------------------------
| Profit before taxes, EUR m | 177 | 101 | 635 |
--------------------------------------------------------------------------------
| as % of net sales | 18.6 | 11.8 | 17.3 |
--------------------------------------------------------------------------------
| Profit for the period, EUR m | 131 | 77 | 501 |
--------------------------------------------------------------------------------
| as % of net sales | 13.8 | 9.0 | 13.6 |
--------------------------------------------------------------------------------
| Return on capital employed*, | 37.8 | 29.5 | 31.5 |
| % | | | |
--------------------------------------------------------------------------------
| Return on equity*, % | 36.2 | 30.0 | 30.1 |
--------------------------------------------------------------------------------
| Equity ratio, % | 54.5 | 50.2 | 61.6 |
--------------------------------------------------------------------------------
| Gearing ratio, % | -1.4 | 19.6 | 1.2 |
--------------------------------------------------------------------------------
| Net interest-bearing | -23 | 276 | 22 |
| liabilities, EUR m | | | |
--------------------------------------------------------------------------------
| Equity per share, EUR | 12.00 | 10.31 | 13.26 |
--------------------------------------------------------------------------------
| Personnel on average | 13 258 | 11 903 | 13 121 |
--------------------------------------------------------------------------------
| Number of shares | 140 073 340 | 138 886 445 | 139 957 418 |
--------------------------------------------------------------------------------
| - excluding treasury shares | 138 371 959 | 136 584 748 | 138 172 037 |
--------------------------------------------------------------------------------
| - diluted, average | 138 426 183 | 137 719 905 | 137 144 515 |
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| * Based on previous 12 months | | | |
--------------------------------------------------------------------------------
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| CHANGES IN EQUITY Q1/2007 |
--------------------------------------------------------------------------------
| EUR million |
--------------------------------------------------------------------------------
| | Attributable to equity shareholders of the parent |
--------------------------------------------------------------------------------
| | Share | Share | Fair | Trans- | Retain | Total | Minor |
| | capi | prem. | value | lation | ed | | ity |
| | tal | act. | and | diff. | earnin | | int. |
| | | | other | | gs | | |
| | | | reser | | | | |
| | | | ves | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 1 | 238 | 220 | 44 | -3 | 1 333 | 1 832 | 1 |
| JAN | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
| hedging | | | | | | | |
--------------------------------------------------------------------------------
| Transferred to | | | -29 | | | -29 | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | | | 8 | | | 8 | |
--------------------------------------------------------------------------------
| Change in | | | | -4 | | -4 | |
| translation | | | | | | | |
| difference | | | | | | | |
--------------------------------------------------------------------------------
| Cost of | | | | | | | |
| share-based | | | | | | | |
| payments | | | | | | | |
--------------------------------------------------------------------------------
| Disposal of | | | -2 | | 2 | | |
| treasury | | | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | -276 | -276 | |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 131 | 131 | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 31 | 238 | 220 | 21 | -7 | 1 191 | 1 663 | 1 |
| MAR | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGE IN EQUITY Q1/2006 |
--------------------------------------------------------------------------------
| EUR million |
--------------------------------------------------------------------------------
| | Attributable to equity shareholders of the parent |
--------------------------------------------------------------------------------
| | Share | Share | Fair | Trans- | Retain | Total | Minor |
| | capi | prem. | value | lation | ed | | ity |
| | tal | act. | and | diff. | earnin | | int. |
| | | | other | | gs | | |
| | | | reser | | | | |
| | | | ves | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 1 | 236 | 220 | 31 | -5 | 1 016 | 1 497 | 1 |
| JAN | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
| hedging | | | | | | | |
--------------------------------------------------------------------------------
| Transferred to | | | 32 | | | 32 | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | | | -8 | | | -8 | |
--------------------------------------------------------------------------------
| Cost of | | | 1 | | | 1 | |
| share-based | | | | | | | |
| payments | | | | | | | |
--------------------------------------------------------------------------------
| Disposal of | | | -3 | | 2 | 0 | |
| treasury | | | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | 0 | | 0 | |
| translation | | | | | | | |
| difference | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | -191 | -191 | |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 77 | 77 | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 31 | 236 | 220 | 54 | -5 | 904 | 1 408 | 1 |
| MAR | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES BY DIVISION |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Ruukki Construction | 213 | 133 | 829 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 167 | 132 | 557 |
--------------------------------------------------------------------------------
| Ruukki Metals | 570 | 591 | 2 291 |
--------------------------------------------------------------------------------
| Group management and other | 0 | 0 | 4 |
| units | | | |
--------------------------------------------------------------------------------
| Consolidated net sales | 950 | 856 | 3 682 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT BY DIVISION |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Ruukki Construction | 33 | 8 | 101 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 32 | 25 | 106 |
--------------------------------------------------------------------------------
| Ruukki Metals | 119 | 77 | 364 |
--------------------------------------------------------------------------------
| Group management and other | -6 | -15 | -42 |
| units | | | |
--------------------------------------------------------------------------------
| Consolidated operating profit | 178 | 95 | 529 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NET SALES |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 |
--------------------------------------------------------------------------------
| Ruukki Construction | 133 | 181 | 244 | 271 | 213 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 132 | 142 | 127 | 157 | 167 |
--------------------------------------------------------------------------------
| Ruukki Metals | 591 | 604 | 514 | 583 | 570 |
--------------------------------------------------------------------------------
| Group management and | 0 | 1 | 0 | 2 | 0 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated net sales | 856 | 928 | 885 | 1 013 | 950 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 |
--------------------------------------------------------------------------------
| Ruukki Construction | 8 | 21 | 33 | 39 | 33 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 25 | 21 | 28 | 33 | 32 |
--------------------------------------------------------------------------------
| Ruukki Metals | 77 | 87 | 89 | 111 | 119 |
--------------------------------------------------------------------------------
| Group management and | -15 | -2 | -9 | -16 | -6 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated operating | 95 | 127 | 140 | 167 | 178 |
| profit | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NET SALES (PRO FORMA) |
| EXCLUDING NORDIC REINFORCING UNITS |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 |
--------------------------------------------------------------------------------
| Ruukki Construction | 133 | 181 | 244 | 271 | 213 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 132 | 142 | 127 | 157 | 167 |
--------------------------------------------------------------------------------
| Ruukki Metals | 521 | 523 | 497 | 583 | 570 |
--------------------------------------------------------------------------------
| Group management and | 0 | 1 | 0 | 2 | 0 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated net sales | 786 | 848 | 868 | 1 013 | 950 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT (PRO FORMA) |
| EXCLUDING NORDIC REINFORCING UNITS |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 |
--------------------------------------------------------------------------------
| Ruukki Construction | 8 | 21 | 33 | 39 | 33 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 25 | 21 | 28 | 33 | 32 |
--------------------------------------------------------------------------------
| Ruukki Metals | 71 | 79 | 90 | 111 | 119 |
--------------------------------------------------------------------------------
| Group management and | -15 | -2 | -9 | -16 | -6 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated operating | 89 | 119 | 141 | 167 | 178 |
| profit | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES BY REGION |
--------------------------------------------------------------------------------
| as % of net sales | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Finland | 31 | 32 | 31 |
--------------------------------------------------------------------------------
| Other Nordic countries | 34 | 35 | 31 |
--------------------------------------------------------------------------------
| Central Eastern Europe, | 18 | 11 | 17 |
| Russia and Ukraine | | | |
--------------------------------------------------------------------------------
| Rest of Europe | 16 | 20 | 19 |
--------------------------------------------------------------------------------
| Other countries | 2 | 2 | 2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONTINGENT LIABILITIES |
--------------------------------------------------------------------------------
| EUR million | Mar 07 | Mar 06 | Dec 06 |
--------------------------------------------------------------------------------
| Mortgaged real estates | 26 | 29 | 26 |
--------------------------------------------------------------------------------
| Pledges given | 3 | 18 | 5 |
--------------------------------------------------------------------------------
| Collateral | | | |
--------------------------------------------------------------------------------
| Given on behalf of | 0 | 0 | 0 |
| associates | | | |
--------------------------------------------------------------------------------
| Given on behalf of others | 5 | 3 | 5 |
--------------------------------------------------------------------------------
| Leasing and rental responsibilities | 107 | 131 | 100 |
--------------------------------------------------------------------------------
| Other financial liabilities | 7 | 4 | 11 |
--------------------------------------------------------------------------------
Subsequent to the divestment of the operating companies of Oy Ovako Ab, both Oy
Ovako Ab and its subsidiary Ovako Svenska AB were put into voluntary liquidation
and most of Oy Ovako Ab's assets were distributed to shareholders as a
disbursement. The shareholders (Rautaruukki Corporation, AB SKF and Wärtsilä
Corporation) have, as required under the Finnish Companies Act, submitted to the
liquidator a directly enforceable guarantee as surety against payment of the
disbursements.
--------------------------------------------------------------------------------
| VALUES OF DERIVATIVE CONTRACTS AT 31 MARCH 2007, EUR million |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOW HEDGES INCLUDED IN HEDGE ACCOUNTING |
--------------------------------------------------------------------------------
| | Nominal value | Fair value |
--------------------------------------------------------------------------------
| Interest rate derivatives | | |
--------------------------------------------------------------------------------
| Interest rate swaps | 25 | 0.1 |
--------------------------------------------------------------------------------
| Zinc derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts * | 39 000 | 24.0 |
--------------------------------------------------------------------------------
| Electricity derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts ** | 1 487 | 2.0 |
--------------------------------------------------------------------------------
| * tonnes |
--------------------------------------------------------------------------------
| ** GWh |
--------------------------------------------------------------------------------
The unrealised result of cash flow hedges is recognised in equity to the extent
the hedge is effective. Other changes in fair value are recorded through profit
and loss.
--------------------------------------------------------------------------------
| DERIVATIVES NOT INCLUDED IN HEDGE ACCOUNTING |
--------------------------------------------------------------------------------
| | Nominal value | Fair value |
--------------------------------------------------------------------------------
| Interest rate derivatives | | |
--------------------------------------------------------------------------------
| Interest rate swaps | 75 | 0.5 |
--------------------------------------------------------------------------------
| Foreign currency derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts | 987 | -0.8 |
--------------------------------------------------------------------------------
| Options | | |
--------------------------------------------------------------------------------
| Bought | 85 | -0.9 |
--------------------------------------------------------------------------------
| Sold | 85 | 0.2 |
--------------------------------------------------------------------------------
| | 170 | -0.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGES IN PLANT, PROPERTY AND EQUIPMENT |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Carrying value at start of period | 1 043 | 1 033 | 1 033 |
--------------------------------------------------------------------------------
| Increase | 23 | 18 | 130 |
--------------------------------------------------------------------------------
| Increase through acquisitions | 1 | 11 | 71 |
--------------------------------------------------------------------------------
| Decrease | -1 | 0 | -19 |
--------------------------------------------------------------------------------
| Decrease through divestments | 0 | 0 | -42 |
--------------------------------------------------------------------------------
| Depreciation and value adjustments | -30 | -34 | -130 |
--------------------------------------------------------------------------------
| Exchange rate differences | -1 | 1 | -1 |
--------------------------------------------------------------------------------
| Carrying value at end of period | 1 035 | 1 029 | 1 043 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TRANSACTIONS WITH RELATED PARTIES (ASSOCIATED COMPANIES) |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q1/06 | 2006 |
--------------------------------------------------------------------------------
| Sales to associated companies | 6 | 8 | 29 |
--------------------------------------------------------------------------------
| Purchases from associated companies | 2 | 5 | 27 |
--------------------------------------------------------------------------------
| Non-current receivables | 0 | 38 | 0 |
| at 31 March | | | |
--------------------------------------------------------------------------------
| Trade and other receivables | 9 | 10 | 10 |
| at 31 March | | | |
--------------------------------------------------------------------------------
| Trade and other creditors | 1 | 8 | 2 |
| at 31 March | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INVESTMENT COMMITMENTS* | |
--------------------------------------------------------------------------------
| Me | after 31 March 2007 |
--------------------------------------------------------------------------------
| Maintenance investments | 40 |
--------------------------------------------------------------------------------
| Development investments and investments in special | 160 |
| products | |
--------------------------------------------------------------------------------
| Total | 200 |
--------------------------------------------------------------------------------
| *Investment commitments include the estimated costs of projects that have |
| received permission to go ahead. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INFORMATION ABOUT ACQUISITIONS | | |
--------------------------------------------------------------------------------
| EUR million | Fair value | Acquired company's |
| | | carrying amount |
--------------------------------------------------------------------------------
| Acquisition cost | 4 | |
--------------------------------------------------------------------------------
| - including conditional purchase | | |
| price | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets and liabilities of acquired | | |
| companies (carrying value) | | |
--------------------------------------------------------------------------------
| Non-current assets | 1 | 1 |
--------------------------------------------------------------------------------
| Current assets | | |
--------------------------------------------------------------------------------
| Inventories | 2 | 2 |
--------------------------------------------------------------------------------
| Trade and other receivables | 4 | 4 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 1 | 1 |
--------------------------------------------------------------------------------
| Total assets | 9 | 9 |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing | 0 | 0 |
--------------------------------------------------------------------------------
| Other | 1 | 1 |
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing | 0 | 0 |
--------------------------------------------------------------------------------
| Other | 5 | 5 |
--------------------------------------------------------------------------------
| Total liabilities | 6 | 6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | 2 | 2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost | 4 | |
--------------------------------------------------------------------------------
| Goodwill | 1 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost paid in cash | 4 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents of the | 1 | |
| acquired subsidiary | | |
--------------------------------------------------------------------------------
| Impact on cash flow | 2 | |
--------------------------------------------------------------------------------
| Includes information about the acquisition of AB Omeo Mekaniska Verkstad. |
| The acquisition has been recognised on a preliminary basis in the manner |
| permitted by IFRS 3. Determination of the fair value of the company's assets |
| and liabilities was still incomplete at the time the interim report was |
| published. |
--------------------------------------------------------------------------------
FURTHER INFORMATION IS AVAILABLE FROM
Sakari Tamminen, President & CEO, tel. +358 20 592 9075
Mikko Hietanen, CFO, tel. +358 20 592 9030
Rautaruukki Corporation
Taina Kyllönen
VP, Corporate Communications
Rautaruukki supplies metal-based components, systems and integrated systems to
the construction and mechanical engineering industries. The company has a wide
selection of metal products and services. Rautaruukki has operations in 23
countries and employs 13,000 people. Net sales in 2006 totalled EUR 3.7 billion.
The company's share is quoted on the Helsinki Exchanges (Rautaruukki Oyj:
RTRKS). The Corporation has used the marketing name Ruukki since 2004.
www.ruukki.com
DISTRIBUTION
Helsinki Exchanges
Main media
www.ruukki.com
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