2010-10-22 08:00:00 CEST
2010-10-22 08:01:14 CEST
REGULATED INFORMATION
Rautaruukki - Interim report (Q1 and Q3)
Rautaruukki Corporation Interim report for Q1-Q3/2010: Clear growth in order intake, profitability improved significantly on previous year
Rautaruukki Corporation Interim report 22 October 2010 at 9.00 EEST
July-September 2010 in brief
- Order intake was EUR 576 million (up by around 40 per cent year on year).
- Comparable net sales were EUR 615 million (475).
- Comparable operating profit was EUR 41 million (-49), equating to 6.6 per cent
of net sales (-10.3).
- Comparable result before income tax was EUR 31 million (-59),
equating to 5.1 per cent of net sales (-12.3).
January-September 2010 in brief
- Order intake was EUR 1,679 million (up by around 30 per cent year on year).
- Comparable net sales were EUR 1,762 million (1,387).
- Comparable operating profit was EUR 42 million (-241), equating to 2.4 per
cent of net sales (-17.4).
- Comparable result before income tax was EUR 20 million (-266),
equating to 1.1 per cent of net sales (-19.2).
Estimate of the full-year financial performance
Net sales in 2010 are estimated to grow 25-30 per cent year on year.
Profitability is expected to improve significantly compared to the previous year
and the full-year comparable result before income tax is estimated to be
positive. Due to non-recurring items and unrealised gains and losses arising
from USD derivatives, which are used to hedge purchases of raw materials, the
full-year reported result before income tax is estimated to be negative.
The company earlier estimated consolidated net sales in 2010 to grow 25-30 per
cent year on year. Profitability was earlier expected to improve significantly
compared to the previous year and the full-year result before income tax was
estimated to be positive.
KEY FIGURES
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Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
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Comparable figures
Comparable net sales, EUR m 615 475 1 762 1 387 1 901
Comparable operating profit, EUR m 41 -49 42 -241 -272
Comparable operating profit as % of net
sales 6.6 -10.3 2.4 -17.4 -14.3
Comparable result before income tax,
EUR m 31 -59 20 -266 -303
Reported figures
Reported net sales, EUR m 614 485 1 774 1 429 1 950
Reported operating profit, EUR m -6 -54 -8 -284 -323
Reported result before income tax, EUR m -48 -64 -63 -313 -359
Net cash flow before financing
activities, EUR m -83 -42 -208 -48 30
Earnings per share, EUR -0.26 -0.32 -0.35 -1.65 -1.98
Return on capital employed
(rolling 12 mths), % -2.1 -10.0 -14.2
Gearing ratio, % 42.9 26.4 22.3
Personnel on average 11 923 12 413 11 796 12 914 12 664
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President & CEO Sakari Tamminen:
Our order intake during July-September showed year-on-year growth of around 40
per cent and the order flow amounted to approximately EUR 580 million. Demand
for our products slowed seasonally quarter on quarter, but towards the end of
the report period customer activity began to pick up in nearly all our
businesses.
The value of our order intake in the construction business during the third
quarter was up by almost 30 per cent year on year and by almost 10 per cent
quarter on quarter. Order volumes for residential roofing products grew in
nearly all market areas. In Russia, the order flow in commercial and industrial
construction picked up clearly, and signs of an increase in demand also began to
be visible in Poland and the Czech Republic. However, overall order intake in
commercial and industrial construction still remained low. Good order flow
continued in infrastructure construction despite a slight decline quarter on
quarter.
Our orders in the engineering industry showed clear growth during the first half
of the year and demand continued picking up also in the third quarter,
especially in the manufacture of mining and forest machinery and materials
handling equipment. A delay in new wind farm projects has clearly weakened
demand in the manufacture of equipment for the wind power industry. Market
conditions remained weak in the shipbuilding industry.
Due to seasonal fluctuation, the market for steel products is typically quieter
during the third quarter of the year than during the second and this was
reflected in delivery volumes also this year. On the Nordic markets, demand for
steel products continued to be good in Sweden, but was still fairly quiet in
Finland, even though it picked up towards the end of the third quarter. Demand
for our special steel products continued growing in a number of industries, such
as in the manufacture of equipment for the mining industry, and the share of
special steel products of our steel business increased. We have expanded our
distribution network for special steel products in new market areas, such as
Brazil and China. Sales in these new areas have grown significantly.
Our net sales for January-September grew and our result clearly improved year on
year, although profitability was still unsatisfactory in our construction and
engineering businesses. Our comparable operating profit for July-September was
at the level of the previous quarter.
Net sales in 2010 are estimated to grow 25-30 per cent year on year.
Profitability is expected to improve significantly compared to the previous year
and the full-year comparable result before income tax is estimated to be
positive. Due to non-recurring items and unrealised gains and losses arising
from USD derivatives, which are used to hedge purchases of raw materials, the
full-year reported result before income tax is estimated to be negative.
The company earlier estimated consolidated net sales in 2010 to grow 25-30 per
cent year on year. Profitability was earlier expected to improve significantly
compared to the previous year and the full-year result before income tax was
estimated to be positive.
Specialisation and emerging markets are growth drivers
Earlier this month, we announced our strategy outlines for the next few years.
This means a big step forward for us in developing the business. Our strategic
focuses are specialisation, strengthening our market position and capitalising
on growth in the emerging markets. We are continuing work on the strong
development of the solutions businesses - construction and engineering. The
focus in the steel business is on special steel products, where we can
capitalise on synergies with our engineering business. We will concentrate on
launching new, scalable products and business concepts and on developing our
expertise in special steels. On top of this, we will also focus on strengthening
sales, marketing and customer service, both in countries where we already have
operations and especially in the emerging markets.
Based on the strategy, we also set new targets for our businesses:
- Growth in the share of emerging markets to 50 per cent of consolidated net
sales
- Growth in the share of the solutions businesses - construction and engineering
- to 60 per cent of consolidated net sales
- Increase in the share of special steel products to 60 per cent of the
company's steel business
- Strengthened market position in all core businesses
In the same context, we made changes to the responsibilities of members of the
Corporate Executive Board to accelerate and boost implementation of our growth
strategy.
From 1 November 2010, the Corporate Executive Board will comprise the following
members:
- Sakari Tamminen, President & CEO and chairman of the Corporate Executive Board
- Mikko Hietanen, Executive Vice President, Business Development (deputy to the
President & CEO)
- Tommi Matomäki, Executive Vice President, Ruukki Construction
- Marko Somerma, Executive Vice President, Ruukki Engineering
- Olavi Huhtala, Executive Vice President, Ruukki Metals
- Saku Sipola, Executive Vice President, Marketing, Technology and Supply Chain
Management
- Markku Honkasalo, CFO
For further information, please contact:
Sakari Tamminen, President & CEO, tel. +358 20 592 9075
Mikko Hietanen, CFO, tel. +358 20 592 9030
A presentation in English for analysts and the media will be held on 22 October
2010 at 10.30 EEST at Ruukki, Suolakivenkatu 1, 00810 Helsinki.
A live webcast of the event may be followed online on the company's website at
www.ruukki.com/investors at 10.30. This event can also be attended through a
conference call. To attend the conference call, please call the number below
5-10 minutes before the scheduled start time: +44 (0) 20 7162 0125, access code:
877430.
A replay of the webcast can be viewed on the company website on 22 October 2010
from approximately 16.00 EEST. An encore replay of the conference call will be
available until 29 October 2010 at: +44 (0) 20 7031 4064, access code: 877430.
Rautaruukki Corporation
Anne Pirilä
SVP, Communications and Investor Relations
Rautaruukki supplies metal-based components, systems and integrated systems to
the construction and engineering industries. The company has a wide selection of
metal products and services. Rautaruukki has operations in 27 countries and
employs 11,800 people. Net sales in 2009 totalled EUR 2.0 billion. The company's
share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS). The Corporation
uses the marketing name Ruukki.
Distribution:
NASDAQ OMX Helsinki
Main media
www.ruukki.com
RAUTARUUKKI CORPORATION'S INTERIM REPORT FOR JANUARY-SEPTEMBER 2010
Business environment
Recent more positive signals have allayed fears of a double-dip recession in the
global economy even though news of weaker-than-expected economic development in
the United States and China triggered concern on the markets during the third
quarter. Fading export demand has, however, also been reflected in Europe, where
the growth rate during July-September appears to have levelled off after a
strong second quarter. This is also the case in Finland, where the spurt of
growth witnessed during the second quarter seems to have been followed by a
phase of slightly more moderate growth.
Growth in industrial production continued in the third quarter, even though
production levels were still far below those seen before the financial crisis.
Except in residential construction, private investment demand still remained
modest.
A low level of investments still kept demand for commercial and industrial
construction fairly quiet. However, in some of Ruukki's market areas, especially
Russia, commercial and industrial construction activity continued picking up
during the third quarter. Positive development in residential construction
continued. In line with normal seasonal fluctuation, demand was higher during
the quarter ended than earlier during the year. Activity in road and railway
construction in the Nordic countries continued at a good level.
In the engineering industry, there was notable growth in the order intake of
Ruukki's main customers during the first half of the year. Market conditions,
especially in the manufacture of mining and forest machinery and materials
handling equipment, continued to improve also in the third quarter. A delay in
new wind farm projects has weakened demand in the manufacture of equipment for
the wind power industry. Market conditions remained weak in the shipbuilding
industry.
In line with normal seasonal fluctuation, apparent demand for steel in Europe
fell somewhat during the third quarter compared to the second quarter. Average
monthly crude steel production in the EU-27 region was some 15 per cent lower
during July and August than during the second quarter. Nevertheless, year-on-
year production volumes were clearly higher, although consumption of steel in
Europe remains far short of the level in 2007 and 2008. Demand for steel
products still continued to be slower in Finland than in most of Ruukki's other
market areas, even though it picked up towards the end of the third quarter.
Order intake and backlog
The company's order intake during the third quarter was EUR 576 million, which
is around 40 per cent higher year on year and slightly lower quarter on quarter.
Order intake grew year on year in all business areas, with highest relative
growth in the engineering business. Group order flow was up in all market areas,
with strongest growth in Russia, Sweden and in Ruukki's new markets for special
steel products in Brazil, China and Turkey. Quarter on quarter, order flow
dipped in the steel business in line with normal seasonal fluctuation, yet grew
in other business areas.
Group order intake during January-September was EUR 1,679 million, which is
about 30 per cent up year on year.
Order backlog at the end of the report period was somewhat higher year on year
and roughly at the same level as at the end of June 2010.
Net sales
Unless otherwise stated, the figures in brackets refer to the same period a year
earlier.
Consolidated comparable net sales for the third quarter were EUR 615 million
(475), up 29 per cent year on year. Higher comparable net sales were
attributable especially to larger delivery volumes of steel products. Reported
net sales were EUR 614 million (485). The impact of the Mo i Rana unit in Norway
has been eliminated from comparable net sales.
Consolidated comparable net sales for January-September 2010 were EUR 1,762
million (1,387) and reported net sales EUR 1,774 million (1,429). The solutions
businesses - Ruukki Construction and Ruukki Engineering - accounted for 34 per
cent (48) of consolidated comparable net sales. Special steel products accounted
for 26 per cent (19) of Ruukki Metals' net sales for January-September.
NET SALES BY BUSINESS AREA
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EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
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Comparable net sales
Ruukki Construction 184 164 456 442 589
Ruukki Engineering 45 53 137 220 263
Ruukki Metals 386 257 1 168 724 1 050
Other 0 0 1 0 0
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Comparable net sales, total 615 475 1 762 1 387 1 901
Items affecting comparability included in
reported net sales 0 10 12 43 49
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Reported net sales 614 485 1 774 1 429 1 950
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Consolidated comparable net sales for the third quarter rose year on year in
almost all market areas. Russia, Ukraine and Other Nordic countries showed the
strongest relative improvement in net sales. In Russia, good demand for colour-
coated steel products and higher delivery volumes in commercial and industrial
construction boosted net sales. Net sales growth in Other Nordic countries was
particularly attributable to improved demand for steel products in Sweden.
NET SALES BY REGION
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EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
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Comparable net sales
Finland 171 138 478 442 586
Other Nordic countries 197 132 551 437 592
Central Eastern Europe 87 67 201 171 231
Russia and Ukraine 60 42 138 99 141
Rest of Europe 71 58 274 163 241
Other countries 30 38 120 74 110
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Comparable net sales, total 615 475 1 762 1 387 1 901
Items affecting comparability included in
reported net sales 0 10 12 43 49
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Reported net sales 614 485 1 774 1 429 1 950
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Operating profit
Consolidated comparable operating profit for the third quarter was EUR 41
million (-49), equating to 6.6 per cent of net sales (-10.3). Higher comparable
operating profit year on year was mainly attributable to larger delivery volumes
of steel products, growth in the share of special steel products of delivery
volumes and increased selling prices.
Items affecting the comparability of operating profit have been separated from
the reported figures to ensure a better understanding and comparability of the
company's operating activities and their result. In the third quarter,
unrealised gains and losses relating to USD derivatives were added to items
affecting the comparability of operating profit. These derivatives are used to
hedge the group's purchases of raw materials. Information for reference periods
has been restated accordingly since the start of 2009. Items affecting the
comparability of the reported operating profit by quarter are detailed in the
table at the end of the Summary financial statement and notes section.
Reported negative operating profit for the third quarter was -EUR 6 million (-
54). Reported operating profit for July-September was weakened by unrealised
losses of EUR 40 million on USD derivatives (Q2/10: EUR 15 million gains). The
third-quarter negative operating profit of the Mo i Rana unit in Norway was
-EUR 7 million, which includes a writedown of EUR 8 million on property, plant
and equipment.
Comparable consolidated operating profit for January-September was EUR 42
million (-241), equating to 2.4 per cent of net sales (-17.4) and reported
negative operating profit was -EUR 8 million (-284).
OPERATING PROFIT BY BUSINESS AREA
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EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
------------------------------------------------------------------------------
Comparable operating profit
Ruukki Construction 1 -4 -32 -20 -44
Ruukki Engineering -7 -3 -22 12 4
Ruukki Metals 51 -38 107 -223 -219
Other -4 -3 -11 -10 -13
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Comparable operating profit, total 41 -49 42 -241 -272
Items affecting comparability included in
reported operating profit -47 -6 -50 -43 -51
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Reported operating profit -6 -54 -8 -284 -323
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Financial items and result
Consolidated net finance costs during January-September totalled EUR 57 million
(29). Net interest costs were EUR 21 million (19).
The divestment of Rautaruukki Corporation's associated company Oy Ovako Ab was
completed in November 2006. Rautaruukki had a 47 per cent holding in the
company. As part of the transaction, Rautaruukki received an interest-bearing
vendor note from Ovako. In August 2010, private equity investor Triton signed an
agreement under which it acquired the entire share capital of the Bar, Bright
Bar and Tube and Ring companies, which were part of Ovako. On the basis of the
arrangement, Rautaruukki waived the vendor note in return for a security
entitling it to ownership of around 2.2 per cent in Ovako. Consequently,
Rautaruukki wrote down around EUR 33 million, which is included in net finance
costs for the third quarter.
Group taxes for January-September were EUR 14 million positive (84), which
includes a positive change of EUR 24 million (80) in deferred tax.
The result for January-September was -EUR 49 million (-229).
Earnings per share were -EUR 0.35 (-1.65).
Balance sheet, cash flow and financing
Total assets at 30 September were EUR 2,604 million (2,497). Equity at 30
September 2010 was EUR 1,405 million (1,553), equating to EUR 10.12 per share
(11.18). Equity has decreased by EUR 102 million since the end of 2009 mainly
because of the dividend payout in April.
The equity ratio at 30 September 2010 was 54.6 per cent (62.7) and the gearing
ratio was 42.9 per cent (26.4). Net interest-bearing liabilities at 30 September
2010 were EUR 603 million (410).
Return on equity for the past twelve months was -6.4 per cent (-10.8) and return
on capital employed was -2.1 per cent (-10.0).
Net cash flow from operating activities during January-September was -EUR 87
million (69) and net cash flow before financing activities was -EUR 208 million
(-48). EUR 161 million was tied up in net working capital (EUR 222 million
released) during the first nine months of the year.
At 30 September 2010, the group had liquid assets of EUR 72 million and untapped
committed credit limits and credit facilities of EUR 490 million.
Actions to improve operational efficiency
In October 2008, Ruukki initiated its corporate-wide Boost programme, which aims
at enhancing operational efficiency and at permanently improving the company's
competitive edge and profitability. The programme originally aimed at an
annualised improvement of EUR 150 million in the company's operating profit by
the end of 2011. The programme has progressed much faster than originally
planned and the annualised impact of actions was estimated to be EUR 174 million
at the end of the report period.
The largest single benefits have been achieved from the centralisation of steel
service centre operations in the Nordic countries and improved efficiency in the
supply chain and construction business.
Even though the EUR 150 million target in the Boost operational excellence
programme has already been achieved, projects will continue as planned. The
focus of the programme is shifting away from production, sourcing and logistics
projects to especially the sales, marketing and technology fronts.
Capital expenditure
Net cash used in investing activities during January-September was -EUR 121
million (-117).
Capital expenditure on tangible and intangible assets during the first nine
months of the year totalled EUR 129 million (121), of which maintenance
investments accounted for EUR 95 million (52). Other net cash flow from
investing activities was EUR 8 million positive (4).
Depreciation was EUR 120 million (108).
Group capital expenditure on tangible and intangible assets in 2010 is expected
to be in the region of EUR 180 million.
Investments to modernise the blast furnaces and change the feedstock base total
around EUR 210 million and environmental investments being made in the same
context will total a further EUR 60 million. Around EUR 115 million of the total
investments are expected to be scheduled for 2010, around EUR 100 million for
2011 and around EUR 10 million for 2012. EUR 46 million of the investments were
made during 2009.
Personnel
The group employed an average of 11,796 persons (12,914) during January-
September and at 30 September 2010, the headcount was 11,621 (12,204). At 30
September 2010, 53 per cent (51) of Ruukki's personnel worked in Finland.
PERSONNEL BY REGION
-----------------------------------------------------------
30 Sep 2010 30 Sep 2009 31 Dec 2009
-----------------------------------------------------------
Finland 6 207 6 173 5 905
Other Nordic countries 792 1 123 1 023
Central Eastern Europe 2 048 2 283 2 163
Russia and Ukraine 2 154 2 274 2 214
Rest of Europe 88 77 79
Other countries 332 274 264
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Total 11 621 12 204 11 648
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During the first nine months of 2010, safety measured in terms of accidents per
million hours worked was 7 (8), a slight improvement year on year.
Shares and share capital
During the first nine months of the year, 145 million (152) Rautaruukki Oyj
shares (RTRKS) were traded on NASDAQ OMX Helsinki for a total of EUR 2,142
million (2,203). The highest price quoted was EUR 17.44 in January and the
lowest was EUR 11.62 in July. The volume weighted average price was EUR 14.75.
The share closed at EUR 15.16 (16.40) at 30 September 2010 and the company had a
market capitalisation of EUR 2,127 million (2,301).
Rautaruukki's share is also traded on multilateral trading facilities (MTF).
According to information received by the company, a total of 33 million
Rautaruukki shares were traded on multilateral trading facilities during
January-September for a total of EUR 484 million.
The company's registered share capital at 30 September 2010 was EUR 238.5
million and there were 140,285,425 shares issued.
At 30 September 2010, the company held 1,421,575 treasury shares, which had a
market capitalisation of EUR 21.6 million and an accountable par value of EUR
2.4 million. Treasury shares accounted for 1.01 per cent of the total number of
shares and votes.
The 2009 Annual General Meeting granted the Board of Directors the authority to
decide on a share issue, which includes the right to issue new shares or to
transfer treasury shares held by the company. This authority applies to a
maximum of 15,000,000 shares in total. The Board of Directors has the right to
disapply the pre-emption right of existing shareholders. The authority also
includes the right to decide on a bonus issue. The authority is valid until the
close of the 2011 Annual General Meeting. The Board of Directors had not
exercised this authority by the end of September 2010.
The 2010 Annual General Meeting granted the Board of Directors the authority to
acquire a maximum of 12,000,000 of the company's own shares. The authority is
valid until the close of the following Annual General Meeting. The Board of
Directors had not exercised this authority by the end of the report period.
At the end of the report period, the Board of Directors had no valid authority
to issue options or other special rights providing entitlement to shares.
Energy and the environment
In September, Oekom Research ranked Ruukki as one of the world's best companies
in its industry as regards corporate responsibility. The Prime status awarded to
Ruukki means that the company meets industry-specific responsibility
requirements. In addition, Ruukki was chosen for inclusion on the ASPI Eurozone
(Advanced Sustainable Performance Indices), which represents the top 120
European companies in sustainable development and corporate social
responsibility.
Other events
In September, Ruukki announced the donation, based on the authority of the
Annual General Meeting, of a total of EUR 900,000 to university activities in
Finland. Aalto University, Tampere University of Technology and Lappeenranta
University of Technology are the beneficiaries of the donation. The newly formed
Aalto University receives EUR 750,000 of the donation.
BUSINESS AREAS
RUUKKI CONSTRUCTION
* Good demand in residential roofing products and infrastructure construction
* Clear pick-up in demand in commercial and industrial construction in Russia,
overall market conditions still weak
* Clear quarter-on-quarter improvement in profitability
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EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
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Net sales 184 164 456 442 589
Comparable operating profit 1 -4 -32 -20 -44
Unrealised gains and losses on USD
derivatives 0 2 -6 -4
--------------------------------------------------------------------------------
Reported operating profit 1 -4 -30 -26 -49
Comparable operating profit as % of net
sales 0.4 -2.4 -7.0 -4.6 -7.5
Personnel at end of period 4 003 4 368 4 235
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Order intake and backlog
Ruukki Construction's order intake during the third quarter of the year was up
by almost 30 per cent year on year and by almost 10 per cent quarter on quarter.
Order volumes in residential roofing products were up in nearly all market
areas. In Russia, the order flow in commercial and industrial construction
picked up clearly. Signs of an increase in demand began to be visible also in
Poland and the Czech Republic. However, overall order intake in commercial and
industrial construction remained low. Good order flow continued in
infrastructure construction despite a slight decline quarter on quarter.
The order backlog in the construction business at the end of September was about
15 per cent higher year on year and at a similar level to that in June this
year.
Net sales
Ruukki Construction's net sales for the third quarter were up 12 per cent year
on year at EUR 184 million (164).
Good sales of residential roofing products continued during the third quarter
and delivery volumes were up in almost all market areas both year on year and
quarter on quarter. Sales developed particularly well in Central Eastern Europe
partly because of the renewed range of roofing products. New products, such as
the Decorrey steel roof, have sold well in Central Eastern Europe.
Delivery volumes in commercial and industrial construction grew slightly year on
year and quarter on quarter. Delivery growth was strongest in Russia, where the
construction of especially agricultural buildings, continued to pick up, as did
the construction of light industrial, commercial and logistics buildings. Market
conditions remained weak in a number of market areas such as Finland and the
Baltic states.
In infrastructure construction, net sales for the third quarter were up by more
than 40 per cent year on year. Net sales grew on the back of continued brisk
deliveries for Nordic road and railway projects and on growing delivery volumes
of pile structures for building construction.
Selling prices in July-September were somewhat higher than during the second
quarter.
Ruukki Construction's net sales for January-September were slightly up year on
year at EUR 456 million (442). The construction business accounted for 26 per
cent (32) of consolidated comparable net sales. Net sales rose year on year due
to good development in the infrastructure construction business and to sales
growth in residential roofing products, especially in Central Eastern Europe. In
Russia, commercial and industrial construction net sales for January-September
were up year on year. In other market areas, net sales in commercial and
industrial construction were down.
Residential roofing products accounted for 20 per cent (19) of net sales in the
construction business for January-September and infrastructure construction
products accounted for 20 per cent (14).
Operating profit
Ruukki Construction posted an operating profit for July-September of EUR 1
million (-4), which was a clear improvement quarter on quarter. Improved
operating profit was due to higher delivery volumes, especially in residential
roofing products. A greater share of deliveries including own design also
contributed to improved profitability. More efficient operations and higher
selling prices also increased operating profit year on year.
Comparable negative operating profit for January-September was -EUR 32 million
(-20). Negative operating profit was largely due to a low capacity utilisation
rate. Operating profit year on year was particularly weakened by exceptionally
low delivery volumes during the first quarter. Reported negative operating
profit for January-September was -EUR 30 million (-26).
Operational development
In May, Ruukki announced it was to improve the efficiency of its operations by
reorganising production at Anderslöv in Sweden. During the third quarter, work
started on transferring the production of profiled construction components from
Anderslöv to Vimpeli in Finland and Zyrardov in Poland. Employer-employee
negotiations initiated at the Anderslöv plant as a result of these planned
efficiency measures have now ended. The negotiations will result in the loss of
around 50 jobs.
In late 2009, Ruukki launched a new steel roof solution, Ruukki Finnera, which
is a logistically efficient, modular roofing solution that is sold on a ready-
to-install basis straight from distributor stocks. Sales of Finnera have got off
to an excellent start. Consequently, Ruukki decided to build another production
line at Vimpeli to make Finnera products for the following season. Work on
installing the line will start in early 2011. The line will come on stream
during the second quarter of 2011.
Major orders
In July, Ruukki announced a number of commercial and industrial construction
contracts in Central Eastern Europe. Ruukki is to deliver the steel frame
structures and foundations, including installation, for the new boiler plant and
auxiliary buildings of a new power plant unit at Polaniec in Poland. The
contract is worth nearly EUR 13 million.
A delivery contract for a construction project to build a factory making
television and LCD monitors in Poland includes the design, manufacture and
installation of the steel frame, façade and roofing system for the factory.
Ruukki also agreed the delivery of the roof structures for the logistics centre
of a supermarket chain in Romania.
In September, Ruukki announced it had agreed the delivery and installation of
steel structures for a bridge to be built at Motala in Sweden. The contract is
worth over EUR 10 million. In addition to delivering the structures, Ruukki will
take part in design solutions for the bridge in collaboration with the main
contractor and designer. Ruukki's deliveries are scheduled for 2011 and 2012 and
the bridge will open for traffic in 2013.
RUUKKI ENGINEERING
* Clear growth in order intake
* Cabin production started at the Holic unit
* Capacity utilisation rate still low during third quarter
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EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
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Net sales 45 53 137 220 263
Comparable operating profit -7 -3 -22 12 4
Expenses related to closure of Hässleholm,
Oskarström and Dortmund units -1 -5 -5
Unrealised gains and losses on USD
derivatives 0 1 -3 -3
--------------------------------------------------------------------------------
Reported operating profit -7 -3 -22 4 -4
Comparable operating profit as % of net
sales -16.3 -6.2 -16.0 5.4 1.5
Personnel at end of period 1 774 1 683 1 604
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The Mo i Rana unit in Norway has been transferred from Ruukki Engineering to
businesses for sale and is reported as part of the corporation's Other group,
also with respect to reference periods.
Order intake and backlog
Order intake in the engineering business during the third quarter of the year
was up more than 50 per cent from an exceptionally low level year on year. Order
flow was up almost 20 per cent quarter on quarter. Order volumes especially of
cabins, booms and frames for equipment manufacturers for the mining and forest
machine industries and for manufacturers of materials handling equipment grew
year on year. Orders from manufacturers of equipment for the wind power industry
were notably lower than a year earlier, but to some extent higher quarter on
quarter.
The order backlog in the engineering business was almost 30 per cent up year on
year and nearly 20 per cent higher than at the end of June 2010.
Net sales
Ruukki Engineering's net sales for the third quarter were down both year on year
and quarter on quarter at EUR 45 million (53).
Compared to a year earlier, the decline in net sales in the business area was
mostly attributable to lower delivery volumes for the manufacture of equipment
for the wind power industry and the manufacture of other equipment for the
energy industry. Delivery volumes of cabins and booms rose, especially for the
manufacture of equipment for the mining and forestry industries, as did
deliveries to manufacturers of materials handling equipment. Because of sluggish
demand during the holiday season, cabin delivery volumes in July-September were
slightly down quarter on quarter. However, there was continued growth in
deliveries of booms.
On the back of higher steel prices, selling prices rose also in engineering
business deliveries during the third quarter.
Ruukki Engineering's net sales for January-September were EUR 137 million (220)
and accounted for 8 per cent (16) of consolidated comparable net sales. The
decline in net sales was mainly due to smaller delivery volumes for the
manufacture of equipment for the wind power industry and for the manufacture of
other equipment for the energy industry.
Manufacturers of lifting, handling and transportation equipment accounted for
59 per cent (42) of net sales of the engineering business during January-
September and equipment manufacturers for the energy industry accounted for 19
per cent (35).
Operating profit
Ruukki Engineering posted a negative operating profit for July-September of -EUR
7 million (-3). Operating profit was burdened by low capacity utilisation rates
at a number of units and by the start-up of cabin production at the Holic unit
in Slovakia. Higher selling prices and improved efficiency resulted in a slight
improvement in the profitability of the business area quarter on quarter.
Comparable negative operating profit for January-September was -EUR 22 million
(12). The comparable operating loss was mainly due to low capacity utilisation
rate and small delivery volumes. Lower selling prices during the first half also
weakened operating profit year on year. Reported negative operating profit for
January-September was -EUR 22 million (4).
Operational development
In April, Ruukki announced it is to strengthen its cabin production network in
Central Eastern Europe and China. Cabin production start-up began at Holic in
Slovakia in the second quarter and cabin manufacture commenced in the third
quarter. Deliveries from the Holic unit are mainly destined for the Central and
Eastern European markets.
In June, Ruukki announced it is to improve the efficiency of its manufacturing
network by further concentrating boom manufacturing. This means switching boom
manufacturing at the Dortmund unit in Germany to other Ruukki units which
already make booms for mobile machines. Actions on this front are progressing to
plan and will result in closure of the Dortmund unit at the end of October this
year.
RUUKKI METALS
* Order intake up over 40 per cent year on year
* Continued good sales of special steel products
* Steel production capacity utilisation rate at good level
--------------------------------------------------------------------------------
EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------------------
Net sales 386 257 1 168 724 1 050
Comparable operating profit 51 -38 107 -223 -219
Expense caused by low utilisation rate
related to blast furnace modernisation -18
Unrealised gains and losses on USD
derivatives -40 -1 -19 -15 -9
--------------------------------------------------------------------------------
Reported operating profit 11 -39 71 -238 -228
Comparable operating profit as % of net
sales 13.3 -14.7 9.2 -30.8 -20.9
Personnel at end of period 5 335 5 430 5 226
--------------------------------------------------------------------------------
Order intake and backlog
Order intake during the third quarter was up more than 40 per cent year on year,
but, in line with normal seasonal fluctuation, down by around 10 per cent
quarter on quarter. However, order volumes rose towards the end of the third
quarter.
Order flows grew year on year in all product groups. Demand was much brisker for
strip products than for plate products. Orders received from Sweden, Russia and
new markets for special steel products in China, Turkey and Brazil showed
strongest relative growth.
The order backlog in the steel business at the end of the report period was
somewhat higher year on year, but slightly lower than at the end of June this
year.
Net sales
Ruukki Metals' net sales for July-September were EUR 386 million (257) or 50 per
cent higher year on year.
Delivery volumes of steel products decreased quarter on quarter during July-
September in line with normal seasonal fluctuation. Deliveries to the heavy
engineering industry and to subcontractors in the heavy vehicle and automotive
industries remained at a good level. Deliveries to the construction industry
declined slightly quarter on quarter as seasonal demand slowed towards the end
of the report period. Demand for steel products in Sweden continued to be better
than demand in the other Nordic countries. Delivery volumes in Finland were
still relatively small, but increased towards the end of the third quarter.
During July-September, sales of special steel products developed better than
other product groups. Growth in demand continued in a number of sectors - such
as the manufacture of equipment for the mining industry - that use special steel
products. Demand for machines in the construction industry also began to
improve. This year has seen an expansion and strengthening of the distribution
network for special steel products in new market areas such as Brazil and China.
This has resulted in clear sales growth in these countries.
Selling prices of steel products rose during the course of the third quarter,
although this trend levelled off towards the end of the quarter. A higher share
of special steel products of net sales supported positive development of average
selling prices.
Ruukki Metals' net sales for January-September were EUR 1,168 million (724) and
accounted for 66 per cent (52) of consolidated comparable net sales. Higher
delivery volumes, particularly in Sweden and Western Europe, and an increased
share of special steel products of deliveries improved net sales year on year.
Special steel products accounted for 26 per cent (19) of Ruukki Metals' net
sales for the first nine months of the year. Net sales of stainless steel and
aluminium, which are sold as trading products, were up 22 per cent year on year
at EUR 95 million (78).
Operating profit
Ruukki Metals' comparable operating profit for the third quarter was EUR 51
million (-38), which shows a clear improvement year on year. Comparable
operating profit weakened slightly quarter on quarter because higher raw
material prices were fully reflected in product costs during July-September.
Also delivery volumes during the third quarter were lower quarter on quarter.
Reported operating profit for the third quarter was EUR 11 million (-39).
Reported operating profit was weakened by unrealised losses of EUR 40 million
arising from USD derivatives, which are used to hedge purchases of raw materials
(Q2/10: EUR 15 million gains).
Comparable operating profit for January-September was EUR 107 million (-223) and
reported operating profit was EUR 71 million (-238). Good operating profit
development compared to the previous year was mainly due to increased delivery
volumes of steel products, improved utilisation rates in production and to
efficiency actions carried out.
Operating profit for January-September from stainless steel and aluminium, which
are sold as trading products, was up year on year at EUR 7 million (-5).
Steel production
----------------------------------------------------
1 000 tonnes Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
----------------------------------------------------
Steel production 609 604 1 638 1 265 1 892
----------------------------------------------------
The company's steel production was 609 thousand tonnes (604) during the third
quarter and 1,638 thousand tonnes (1,265) during the first nine months of 2010.
Blast furnace 1 at the Raahe Steel Works in Finland was modernised in the second
quarter. The blast furnace was restarted towards the end of May and reached its
target utilisation rate in June, since when the utilisation rate in steel
production has been about 90 per cent, slightly lower in plate products.
It is planned to shut down blast furnace 2 in late June 2011 for similar
modernisation, which will take about two months. Before the blast furnace is
shut down, slab stockpiles will be increased to safeguard customer deliveries
during the modernisation shut-down.
Operational development
Expansion of the distribution network for special steel products is one of the
main focus areas in the steel business during the current year. During the first
part of the year, Ruukki strengthened its distribution network by signing
agreements on distribution cooperation in Brazil. Likewise, the sales network in
China and Turkey has been further expanded through new agreements on
distribution cooperation. Work continued on developing the distribution network
during the third quarter by, among other things, opening a distribution
warehouse for special steel products in Shanghai, China. The warehouse was
opened in Ruukki's existing premises.
In September, Ruukki announced it was to launch a double grade structural tube
on the steel construction market. Ruukki is the first company in Europe to
launch such a tube. Developed together with customers, the double grade tube
will significantly reduce material costs, improve the price competitiveness of
steel structures compared to other materials and decrease the adverse
environmental impacts arising from the manufacture and use of materials.
Events taking place after the report period
In October, after the report period, the company announced it had outlined its
strategy for the next few years. Geographically, the focus of expansion is
strongly on the emerging markets. Work continues on strong development of the
solutions businesses - construction and engineering. The focus in the steel
business is on special steel products, where synergies can be capitalised on
with the company's engineering business.
Based on the strategy, Ruukki has set new targets for its businesses:
- Growth in the share of emerging markets to 50 per cent of consolidated net
sales
- Growth in the share of the solutions businesses - construction and engineering
- to 60 per cent of consolidated net sales
- Increase in the share of special steel products to 60 per cent of the
company's steel business
- Strengthened market position in all core businesses
In connection with the strategy outlined, changes will be made to the
responsibilities of the Corporate Executive Board, which as of 1 November 2010
will comprise the following members:
- Sakari Tamminen, President & CEO and chairman of the Corporate Executive Board
- Mikko Hietanen, Executive Vice President, Business Development (deputy to the
President & CEO)
- Tommi Matomäki, Executive Vice President, Ruukki Construction
- Marko Somerma, Executive Vice President, Ruukki Engineering
- Olavi Huhtala, Executive Vice President, Ruukki Metals
- Saku Sipola, Executive Vice President, Marketing, Technology and Supply Chain
Management
- Markku Honkasalo, CFO
The company is keeping its financial targets unchanged:
- Growth in comparable net sales > 10% p.a.
- Comparable operating profit > 15% of net sales
- Return on capital employed > 20%
- Gearing ratio ~ 60%
- Dividend payout 40-60% of profit for the period
Near-term business risks
The company has detailed business risks and risk management in the Annual Report
2009. The company does not consider any material changes to have taken place
during the report period in the risks and factors of uncertainty presented in
the Annual Report 2009.
Near-term outlook
Positive economic development in Ruukki's main market areas is expected to
continue. Strong consumer confidence and low interest rates are supporting
household demand, especially in the Nordic countries. Investment activity in
industry is still growing slowly.
Good infrastructure construction activity is expected to continue in the Nordic
countries. Commercial and industrial construction, especially in Finland and the
Baltics, is still negligible. On the other hand, private investments in
commercial and industrial construction in Russia have clearly picked up and
market conditions are expected to improve also in Poland and the Czech Republic.
In the engineering business, market conditions are improving. Order volumes -
especially for cabins, booms and frames for mining and forest machines - are
growing. Also demand for heavy cargo handling equipment and construction
machinery and equipment is improving. In the manufacture of equipment for the
energy industry, demand in the wind power sector is not yet expected to
significantly grow during the end of the year from its present level.
Shipbuilding activity in Europe is at a low level.
Worldsteel forecasts growth of around 19 per cent in the apparent demand for
steel in the EU-27 region in 2010 compared to 2009. In the steel business,
demand is expected to continue to improve in the heavy vehicle industry and to
remain stable in the heavy engineering industry and car manufacturing. Supported
by good activity in these industries, delivery volumes of special steel products
are expected to continue at a good level. An expansion of the company's
distribution network into China and Turkey and Brazil, for example, also
supports sales of special steel products.
Net sales in 2010 are estimated to grow 25-30 per cent year on year.
Profitability is expected to improve significantly compared to the previous year
and the full-year comparable result before income tax is estimated to be
positive. Due to non-recurring items and unrealised gains and losses arising
from USD derivatives, which are used to hedge purchases of raw materials, the
full-year reported result before income tax is estimated to be negative.
The company earlier estimated consolidated net sales in 2010 to grow 25-30 per
cent year on year. Profitability was earlier expected to improve significantly
compared to the previous year and the full-year result before income tax was
estimated to be positive.
This interim report is unaudited.
Helsinki, 22 October 2010
Rautaruukki Corporation
Board of Directors
SUMMARY FINANCIAL STATEMENTS AND NOTES
This interim report has been prepared in accordance with IAS 34 Interim
Financial Reporting and, with the exception of the changes in presentation
listed below, is in conformity with the accounting polices published in the
2009 financial statements.
The consolidated financial statements are affected by the following IFRS
standards and interpretations thereof entering into force on 1 January 2010:
* Revised IFRS 3 Business combinations
* Amended IAS 27 Consolidated and Separate Financial Statements
The revised and amended standards referred to above had no impact on this
interim report.
Use of estimates
The preparation of interim reports in conformity with IFRS requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the reporting of contingent assets and liabilities and the reported
amounts of income and expense. Even though these estimates are based on
management's best judgment at the time, actual results may ultimately differ
from these estimates.
Operative capital employed of business segments
The interim report for the second quarter switched over from reporting segment
assets to reporting segment operative capital employed because this is the
indicator that is reported to management and which management monitors.
Operative capital employed is defined as follows:
+ Tangible and intangible assets
+ Available for sale financial assets
+ Inventories
+ Trade receivables
- Trade payables
- Advances received
Figures for the reference period are similarly stated
Disposal group - Mo i Rana unit in Norway
In December 2009, Rautaruukki announced it was to launch a study to reorganise
operations at its Mo i Rana unit in Norway, which made shipbuilding profiles and
flange profiles for wind turbine towers. The unit was part of the Ruukki
Engineering segment. The unit had net sales of EUR 49 million in 2009 and posted
a negative operating profit of -EUR 30 million. It was decided to study the
options, including the partial or entire closure of operations, available to
correct the plant's financial performance. In this connection, worker
consultation with the around 110 persons affected was initiated.
Based on a decision made in September, the plant is to be disposed of and the
relating assets and liabilities are disclosed in the balance sheet separately
from other assets and liabilities. The assets and liabilities of Mo i Rana unit
were measured at 30 September 2010 at the carrying amount or at fair value less
costs to sell, whichever is the lower. In the same context, the unit was
classified as being in the disposal group. The impairment of EUR 8 million
booked on property, plant and equipment in this connection is shown under
depreciation and impairments. At the end of September, the unit had assets of
EUR 3 million and liabilities of EUR 8 million. The unit represents neither a
major line of business nor a geographical area of operations and so does not
satisfy the conditions of discontinued operations.
Rautaruukki has initiated the sale of the business in Mo i Rana and negotiations
have been held with several potential buyer candidates.
During the third quarter, the Mo i Rana unit was transferred from the Ruukki
Engineering segment to the Other group, which also includes corporate management
and non-allocated items. The unit's result is presented in the Other group and
segment information for reference periods has been restated accordingly.
Items affecting comparability
Items affecting the comparability of operating profit have been separated from
the reported figures to ensure a better understanding and comparability of
Ruukki's operating activities and their result. Items affecting comparability
are detailed by quarter in the table at the end of the Summary financial
statement and notes section.
In the third quarter, unrealised changes in the fair value of USD derivatives
used to hedge the group's future cash flows were added to items affecting the
comparability of operating profit. Under IAS 39, these derivatives do not
qualify for hedge accounting, Information for reference periods has been
restated accordingly since the start of 2009.
Individual figures and totals appearing in the tables have been rounded to the
nearest full million of euros.
The figures are unaudited.
CONSOLIDATED INCOME STATEMENT (IFRS)
--------------------------------------------------------------------------------
EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------------------
Net sales 614 485 1 774 1 429 1 950
Cost of sales 565 485 1 604 1 531 2 027
--------------------------------------------------------------------------------
Gross profit 49 -1 170 -102 -77
Other operating income 3 4 11 14 20
Selling and marketing expenses 24 24 77 82 113
Administrative expenses 34 34 112 113 151
Other operating expenses 0 0 1 1 2
--------------------------------------------------------------------------------
Operating profit -6 -54 -8 -284 -323
Finance income 12 17 52 72 81
Finance costs 55 27 109 101 117
--------------------------------------------------------------------------------
Net finance costs -42 -10 -57 -29 -36
Share of profit of equity-accounted
investees 1 0 2 0 0
--------------------------------------------------------------------------------
Result before income tax -48 -64 -63 -313 -359
Income tax expense 12 19 14 84 84
--------------------------------------------------------------------------------
Result for the period -36 -45 -49 -229 -275
Attributable to:
Owners of the company -36 -45 -49 -229 -275
Non-controlling interest 0 0 0 0 0
Earnings per share, diluted, EUR -0.26 -0.32 -0.35 -1.65 -1.98
Earnings per share, basic, EUR -0.26 -0.32 -0.35 -1.65 -1.98
Operating profit as % of net sales -1.0 -11.2 -0.5 -19.9 -16.6
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS)
--------------------------------------------------------------------------------
EUR million Q3/10 Q3/09 Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------------------
Result for the period -36 -45 -49 -229 -275
Other comprehensive income:
Effective portion of changes in fair value of
cash flow hedges 9 8 -2 29 51
Translation differences -10 5 14 1 -5
Defined benefit plan actuarial gains and
losses 0 0 -2 0 -15
Tax on other comprehensive income -2 -2 1 -8 -9
--------------------------------------------------------------------------------
Other comprehensive income for the period,
net of tax -4 11 11 22 22
--------------------------------------------------------------------------------
Total comprehensive income for the period -40 -34 -38 -208 -253
Attributable to:
Owners of the company -40 -34 -38 -208 -253
Non-controlling interest 0 0 0 0 0
--------------------------------------------------------------------------------
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(IFRS)
--------------------------------------------------------------------------------
EUR million 30 Sep 2010 30 Sep 2009 31 Dec 2009
--------------------------------------------------------------------------------
ASSETS
Non-current assets 1 382 1 437 1 404
Deferred tax assets 50 42 39
Current assets
Inventories 643 544 492
Trade and other receivables 454 385 335
Cash and cash equivalents 72 88 261
Assets held for sale 3
--------------------------------------------------------------------------------
Total assets 2 604 2 497 2 532
EQUITY AND LIABILITIES
Equity
Equity attributable to owners of the
company 1 405 1 553 1 507
Non-controlling interest 2 2 2
Non-current liabilities
Loans and borrowings 415 312 387
Non-interest bearing liabilities 52 50 61
Deferred tax liabilities 24 38 37
Current liabilities
Loans and borrowings 260 187 209
Trade payables and other non-interest
bearing liabilities 439 355 328
Liabilities held for sale 8
--------------------------------------------------------------------------------
Total equity and liabilities 2 604 2 497 2 532
--------------------------------------------------------------------------------
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS (IFRS)
--------------------------------------------------------------------
EUR million Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------
Result for the period -49 -229 -275
Adjustments 145 106 178
--------------------------------------------------------------------
Cash flow before change in working capital 96 -123 -97
Change in working capital -161 222 317
Financing items and taxes -21 -30 -38
--------------------------------------------------------------------
Net cash flow from operating activities -87 69 182
Cash inflow from investing activities 9 13 17
Cash outflow from investing activities -130 -131 -170
--------------------------------------------------------------------
Net cash used in investing activities -121 -117 -153
--------------------------------------------------------------------
Net cash flow before financing activities -208 -48 30
Dividends paid -62 -188 -188
Proceeds from loans and borrowings 55 285 434
Repayments of loans and borrowings -22 -248 -330
Change in current liabilities 51 53 76
Other net cash flow from financing activities -7 -21 -18
Translation differences 3 1 1
--------------------------------------------------------------------
Change in cash and cash equivalents -189 -166 7
--------------------------------------------------------------------
KEY FIGURES (IFRS)
--------------------------------------------------------------------------------
Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------------------
Net sales, EUR m 1 774 1 429 1 950
Operating profit, EUR m -8 -284 -323
as % of net sales -0.5 -19.9 -16.6
Result before income tax, EUR m -63 -313 -359
as % of net sales -3.6 -21.9 -18.4
Result for the period, EUR m -49 -229 -275
as % of net sales -2.8 -16.0 -14.1
Net cash flow from operating activities, EUR
m -87 69 182
Net cash flow before financing activities,
EUR m -208 -48 30
Return on capital employed (rolling 12
mths), % -2.1 -10.0 -14.2
Return on equity (rolling 12 mths), % -6.4 -10.8 -15.9
Equity ratio, % 54.6 62.7 59.9
Gearing ratio, % 42.9 26.4 22.3
Net interest-bearing liabilities, EUR m 603 410 336
Equity per share, EUR 10.12 11.18 10.85
Personnel on average 11 796 12 914 12 664
Number of shares 140 285 425 140 285 425 140 285 425
- excluding treasury shares 138 863 850 138 864 817 138 863 850
- diluted, average 138 863 850 138 839 756 138 846 063
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (IFRS)
--------------------------------------------------------------------------------
Equity attributable to owners of the company
-------------------------------------------------
Fair Non-
value Trans- Re- cont-
and other lation Trea- tained rolling
Share Share re- diff- sury earn- inter- Total
EUR million capital premium serves erences shares ings est equity
--------------------------------------------------------------------------------
EQUITY 1 Jan 2009 238 220 -37 -36 -6 1 568 2 1 950
Result for the
period -229 0 -229
Other
comprehensive
income 21 1 22
--------------------------------------------------------------------------------
Total
comprehensive
income for the
period 21 1 -229 0 -208
Share issue 0 0
Dividend
distribution -188 -188
Share-based
payments 0 0
--------------------------------------------------------------------------------
EQUITY 30 Sep
2009 238 220 -15 -36 -6 1 152 2 1 554
EQUITY 1 Jan 2010 238 220 2 -41 -6 1 095 2 1 509
Result for the
period -49 0 -49
Other
comprehensive
income -1 14 -1 11
--------------------------------------------------------------------------------
Total
comprehensive
income for the
period -1 14 -50 0 -38
Dividend
distribution -62 -62
Share-based
payments 0 0 0
--------------------------------------------------------------------------------
EQUITY 30 Sep
2010 238 220 1 -28 -6 982 2 1 407
--------------------------------------------------------------------------------
NET SALES BY REGION (IFRS)
-----------------------------------------------------
As % of net sales Q1-Q3/10 Q1-Q3/09 2009
-----------------------------------------------------
Finland 27 31 30
Other Nordic countries 30 31 31
Central Eastern Europe 11 12 12
Russia and Ukraine 8 7 7
Rest of Europe 16 14 14
Other countries 7 6 6
-----------------------------------------------------
CONTINGENT LIABILITIES (IFRS)
-------------------------------------------------------------------------
EUR million 30 Sep 2010 30 Sep 2009 31 Dec 2009
-------------------------------------------------------------------------
Mortgaged real estate 64 73 64
Pledged assets 0
Other guarantees given 33 40 43
Collateral given on behalf of others 2 2
Rental liabilities 85 110 114
-------------------------------------------------------------------------
DERIVATIVE CONTRACTS
(IFRS)
--------------------------------------------------------------------------------
30 Sep 2010 30 Sep 2009
Nominal 30 Sep 2010 Nominal 30 Sep 2009
EUR million amount Fair value amount Fair value
--------------------------------------------------------------------------------
CASH FLOW HEDGES QUALIFYING FOR HEDGE ACCOUNTING
Zinc derivatives
Forward contracts,
tonnes 22 500 5 29 500 -2
Electricity derivatives
Forward contracts, GWh 1 730 -6 1 909 -20
FAIR VALUE HEDGES QUALIFYING FOR HEDGE ACCOUNTING
Interest rate derivatives 75 1
DERIVATIVES NOT QUALIFYING FOR HEDGE ACCOUNTING
Zinc derivatives
Forward contracts,
tonnes 500 0
Foreign currency
derivatives
Forward contracts 542 -9 368 -11
Options
Bought 175 -3 100 -2
Sold 175 -2 100 -1
--------------------------------------------------------------------------------
The unrealised movements in the fair value of cash flow hedges are recognised in
other comprehensive income items to the extent the hedge is effective. Other
movements in fair value are recorded through profit and loss.
CHANGES IN PROPERTY, PLANT AND EQUIPMENT (IFRS)
-----------------------------------------------------------------------
EUR million Q1-Q3/10 Q1-Q3/09 2009
-----------------------------------------------------------------------
Carrying amount at the beginning of period 1 159 1 124 1 124
Additions 117 120 167
Additions through acquisitions 0 5 5
Disposals -3 -10 -11
Disposals through divestments -3 0
Depreciation and impairment -104 -92 -125
Translation differences 7 -3 -1
-----------------------------------------------------------------------
Carrying amount at the end of period 1 174 1 144 1 159
-----------------------------------------------------------------------
TRANSACTIONS WITH RELATED PARTIES
(IFRS)
--------------------------------------------------------------------------------
EUR million Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------------------
Sales to equity-accounted investees 24 17 24
Purchases from equity-accounted investees 5 5 6
Transactions with Rautaruukki Pension
Foundation 0 4 6
30 Sep 2010 30 Sep 2009 31 Dec 2009
--------------------------------------------------------------------------------
Trade and other receivables from related
parties 6 3 3
Trade and other payables to related parties 0 0 1
--------------------------------------------------------------------------------
INVESTMENT
COMMITMENTS (IFRS)
--------------------------------------------------------------------------------
After 30 Sep After 30 Sep After 31 Dec
EUR million 2010 2009 2009
--------------------------------------------------------------------------------
Maintenance investments 171 224 100
Development investments and
investments in special steel
products 38 108 77
--------------------------------------------------------------------------------
Total 208 332 177
--------------------------------------------------------------------------------
SEGMENT INFORMATION
--------------------------------------------------------------------------------
EUR million Q1-Q3/10 Q1-Q3/09 2009
--------------------------------------------------------------------------------
Comparable net sales
Ruukki Construction 456 442 589
Ruukki Engineering 137 220 263
Ruukki Metals 1 168 724 1 050
Other 1 0 0
--------------------------------------------------------------------------------
Comparable net sales, total 1 762 1 387 1 901
Items affecting comparability included in
reported net sales 12 43 49
--------------------------------------------------------------------------------
Reported net sales 1 774 1 429 1 950
Comparable operating profit
Ruukki Construction -32 -20 -44
Ruukki Engineering -22 12 4
Ruukki Metals 107 -223 -219
Other -11 -10 -13
--------------------------------------------------------------------------------
Comparable operating profit, total 42 -241 -272
Items affecting comparability included in
reported operating profit -50 -43 -51
--------------------------------------------------------------------------------
Reported operating profit -8 -284 -323
Net finance costs -57 -29 -36
Share of profit of equity-accounted
investees 2 0 0
--------------------------------------------------------------------------------
Result before income tax -63 -313 -359
Income tax expense 14 84 84
--------------------------------------------------------------------------------
Result for the period -49 -229 -275
EUR million 30 Sep 2010 30 Sep 2009 31 Dec 2009
--------------------------------------------------------------------------------
Operative capital employed
Ruukki Construction 467 441 431
Ruukki Engineering 154 132 132
Ruukki Metals 1 494 1 393 1 320
Other 33 73 51
--------------------------------------------------------------------------------
Operative capital employed, total 2 148 2 038 1 934
--------------------------------------------------------------------------------
QUARTERLY SEGMENT INFORMATION
--------------------------------------------------------------------------------
EUR million Q1/09 Q2/09 Q3/09 Q4/09 2009 Q1/10 Q2/10 Q3/10
--------------------------------------------------------------------------------
Comparable net sales
Ruukki Construction 132 145 164 147 589 109 163 184
Ruukki Engineering 100 67 53 42 263 42 50 45
Ruukki Metals 249 218 257 325 1 050 348 434 386
Other 0 0 0 0 0 0 1 0
--------------------------------------------------------------------------------
Comparable net sales, total 481 430 475 515 1 901 500 647 615
Items affecting comparability
included in reported net sales 25 8 10 6 49 5 7 0
--------------------------------------------------------------------------------
Reported net sales 506 438 485 521 1 950 505 655 614
Comparable operating profit
Ruukki Construction -11 -6 -4 -24 -44 -23 -10 1
Ruukki Engineering 10 6 -3 -8 4 -6 -8 -7
Ruukki Metals -97 -88 -38 3 -219 -10 66 51
Other -3 -4 -3 -3 -13 -4 -4 -4
--------------------------------------------------------------------------------
Comparable operating profit,
total -100 -92 -49 -32 -272 -43 45 41
Items affecting comparability
included in reported operating
profit -12 -25 -6 -7 -51 7 -11 -47
--------------------------------------------------------------------------------
Reported operating profit -113 -117 -54 -39 -323 -36 34 -6
Net finance costs -9 -10 -10 -7 -36 -8 -6 -42
Share of profit of equity-
accounted investees 0 0 0 0 0 0 1 1
--------------------------------------------------------------------------------
Result before income tax -122 -127 -64 -46 -359 -44 28 -48
Income tax expense 32 33 19 0 84 11 -9 12
--------------------------------------------------------------------------------
Result for the period -90 -94 -45 -46 -275 -33 20 -36
--------------------------------------------------------------------------------
ITEMS AFFECTING COMPARABILITY OF REPORTED NET SALES
----------------------------------------------------------------------------
EUR million Q1/09 Q2/09 Q3/09 Q4/09 2009 Q1/10 Q2/10 Q3/10
----------------------------------------------------------------------------
Other
Net sales of Mo i Rana unit 25 8 10 6 49 5 7 0
----------------------------------------------------------------------------
ITEMS AFFECTING COMPARABILITY OF REPORTED OPERATING PROFIT
--------------------------------------------------------------------------------
EUR million Q1/09 Q2/09 Q3/09 Q4/09 2009 Q1/10 Q2/10 Q3/10
--------------------------------------------------------------------------------
Ruukki Engineering
Expenses related to closure
of Hässleholm, Oskarström
and Dortmund units -5 -5 -1
Unrealised gains and losses
on USD derivatives -1 -2 0 0 -3 1
--------------------------------------------------------------------------------
Ruukki Metals
Expense caused by low
utilisation rate related to
blast furnace modernisation -18
Unrealised gains and losses
on USD derivatives -6 -8 -1 6 -9 6 15 -40
--------------------------------------------------------------------------------
Ruukki Construction
Unrealised gains and losses
on USD derivatives -2 -4 0 2 -4 2
--------------------------------------------------------------------------------
Other
Operating profit of Mo i Rana
unit -3 -6 -4 -16 -30 -2 -2 -7
Provision for fine regarding
price collusion in divested
prestressing steel business -5 0
--------------------------------------------------------------------------------
Items affecting comparability of
reported operating profit, total -12 -25 -6 -7 -51 7 -11 -47
--------------------------------------------------------------------------------
OTHER ITEMS AFFECTING COMPARABILITY OF REPORTED RESULT
--------------------------------------------------------------------------------
EUR million Q1/09 Q2/09 Q3/09 Q4/09 2009 Q1/10 Q2/10 Q3/10
--------------------------------------------------------------------------------
Arrangement fee for revolving
credit facility (financial item) -5 -5
Write-down of vendor note from
Ovako (financial item) -33
--------------------------------------------------------------------------------
Other items affecting
comparability of reported result,
total -5 -5 -33
--------------------------------------------------------------------------------
Formulas for the calculation of key figures:
result before income tax + finance costs -
exchange rate gains (rolling 12 months)
Return on capital
employed, % = --------------------------------------- x100
total equity + loans and borrowings (average at
beginning and end of period)
result before income tax - income tax expense
(rolling 12 months)
Return on equity, % = --------------------------------------- x100
total equity (average at beginning and end of
period)
total equity
Equity ratio, % = --------------------------------------- x100
total assets - advances received
net interest-bearing financial liabilities
Gearing ratio, % = --------------------------------------- x100
total equity
Net interest-bearing = loans and borrowings - current financial assets
financial liabilities and cash and cash equivalents
result for the period attributable to owners of
the company
Earnings per share (EPS) = ---------------------------------------
weighted average number of shares outstanding
during the period
result for the period attributable to owners of
the company
Earnings per share
(EPS), diluted = ---------------------------------------
weighted average diluted number of shares
outstanding during the period
equity attributable to owners of the company
Equity per share = ---------------------------------------
basic number of shares outstanding at the end of
period
total EUR trading of shares
Volume weighted average
price = ---------------------------------------
total number of shares traded
Market capitalisation = basic number of shares at the end of period x
closing price at the end of period
Personnel on average = total number of personnel at the end of each
month divided by the number of months
[HUG#1454272]
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