Rautaruukki - Interim report (Q1 and Q3)

Rautaruukki Corporation Interim report H1/2013: profitability improved, net sales down with lower market prices

Rautaruukki Corporation Stock exchange release 8 August 2013 at 9am EEST

April-June 2013 (Q2/2012)
- Net cash from operating activities was EUR 54 million (-5).
- Order intake was down 9% at EUR 644 million (711).
- Comparable net sales were down 8% at EUR 633 million (688).
- Comparable operating profit was EUR 17 million (10).
- Comparable result before taxes was EUR 6 million (2).

January-June 2013 (H1/2012)
- Net cash from operating activities was EUR 77 million (49).
- Order intake was down 8% at EUR 1,235 million (1,343).
- Comparable net sales were down 9% at EUR 1,222 million (1,339).
- Comparable operating profit was EUR 21 million (-1).
- Comparable result before taxes was EUR 2 million (-19).

Guidance for 2013 remains unchanged
Comparable net sales in 2013 are estimated to be at the same level as in 2012.
Comparable operating profit is estimated to improve compared to 2012 and to be
positive.

Net sales and operating profit for 2012 have been restated for reasons of
structural comparability.  Part of Ruukki Engineering's business was divested at
the end of 2012. The units excluded from the arrangement have been part of
Ruukki Metals since the start of 2013. Ruukki Engineering units transferred to
Fortaco and other Ruukki Engineering units have been eliminated from comparable
figures.

 KEY FIGURES
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                                          Q2/13  Q2/12 Q1-Q2/13 Q1-Q2/12   2012
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 Comparable figures
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 Comparable net sales, EUR m                633    688    1 222    1 339  2 597
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 Comparable operating profit, EUR m          17     10       21       -1    -50
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 Comparable operating profit as % of net
 sales                                      2,6    1,5      1,7     -0,1   -1,9
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 Comparable result before income tax, EUR
 m                                            6      2        2      -19    -88
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Reported figures
-------------------------------------------------------------------------------
 Reported net sales, EUR m                  633    742    1 223    1 444  2 796
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 Reported operating profit, EUR m            16     -6       20      -22   -101
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 Reported result before income tax, EUR m     5    -14        1      -40   -139
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
 Net cash from operating activities, EUR
 m                                           54     -5       77       49    172
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 Net cash before financing activities,
 EUR m                                       31    -30       38        2     78
-------------------------------------------------------------------------------
 Earnings per share, EUR                  -0,01  -0,08    -0,03    -0,22  -0,85
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 Return on capital employed (rolling 12
 months),%                                                 -3,0     -4,1   -4,9
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 Return on capital employed (annualised),
 %                                                          2,1     -1,9   -4,9
-------------------------------------------------------------------------------
 Gearing ratio, %                                          74,2     71,5   71,2
-------------------------------------------------------------------------------
 Equity ratio, %                                           43,6     46,0   45,6
-------------------------------------------------------------------------------
 Personnel on average                     9 271 11 692    9 074   11 521 11 214
-------------------------------------------------------------------------------


President & CEO Sakari Tamminen:"Economic development was weak in the eurozone also during the second quarter of
the year and Europe was in recession. Economic development continued to show
regional differences. The situation in Europe is difficult and it is hard to see
any basis for growth during the second half of the year either. The emerging
markets and the United States are forecast to continue maintaining global growth
despite growing uncertainty, especially with regard to China's ability to
achieve its growth forecasts. Concerning Ruukki's most important markets, Sweden
and Russia are expected to show better development than other markets. The
situation in Finland gives particular cause for concern because we have lost
much export manufacturing industry and the change is structural rather than a
question of business cycles.

Ruukki's second quarter largely reflected the market situation described above.
Order intake was down 9% and comparable net sales were down 8% year on year.
This was in particular attributable to weaker market prices for standard steel
products driven by overcapacity in the steel industry in Europe and declining
prices of the main steelmaking raw materials. Current market conditions for
steel products are better reflected, however, by delivery volumes of our steel
products, which remained unchanged year on year. Given market conditions, demand
was good in the Ruukki Building Products and Ruukki Building Systems business
areas.

Comparable operating profit was up both year on year and quarter on quarter at
EUR 17 million. During the second quarter, cash flow from operating activities
was EUR 54 million. Better cash flow was achieved through improved earnings
performance as net working capital to sales was practically unchanged compared
to the previous quarter. Despite the dividend payout made during the second
quarter, net debt was at the same level as during the first quarter. We achieved
the targets we set for our efficiency projects initiated during the first half
of last year and, at the end of June, the annualised impact of these projects on
earnings improvement was slightly over EUR 100 million.

Ruukki Building Products improved operating profit year on year, mostly as a
result of the efficiency programme and better gross margin. Order intake for
residential roofing products was at the previous year's level and in line with
general growth expectations. A positive note in current market conditions was
that order intake for building components was up 5% year on year. Orders and net
sales for infrastructure construction were down clearly year on year, which is
consistent with the trend in building permits granted and low investment
activity in the Nordic countries.

Ruukki Building Systems successfully achieved its aim to reduce the operating
loss year on year. This was mainly achieved as a result of the efficiency
programme. We are heading in the right direction, but need to accelerate the
speed in the change process for the rest of the year. Except for a single order
worth more than EUR 30 million received in spring last year, order intake was at
the same level as a year earlier. Order intake was up especially in agricultural
concept buildings in Russia. The order book at the end of the report period was
4% higher than a year earlier.

Ruukki Metals' operating profit was lower than for the previous quarter. This
was because of disruptions to production and higher raw material costs. In terms
of tonnes, delivery volumes were down, but the product mix improved. Sales of
special steel products rose quarter on quarter to account for 34% (32%) of
comparable net sales in our steel business. Net sales of special steel products
were up 10% quarter on quarter. Compared to a year earlier, Ruukki Metals' total
order intake was down 7% in terms of value, but order volumes showed slight
growth. The value of order intake of special steel products was at the same
level as a year earlier, but order volumes were up clearly. This underpins our
strategy to considerably grow the volume of special steel products and our
target to achieve sales of special steels of EUR 850 million in 2015. Special
steel products are notably more profitable than standard products and their
prices fluctuate less during business cycles. We are not aiming to increase our
total steel output through increased sales of special steels, but as the share
of special steels grows the goal is to scale down sales volumes of less
profitable, underperforming standard steel.

We do not expect any significant change in demand for steel products in Europe
during second half of the year compared to the second quarter. The prevailing
overcapacity in the steel industry in Europe means that price development for
the whole year, especially with regard to standard steel products, depends not
just on demand, but also on the price development of main raw materials. There
are good prospects for Ruukki to grow its share of special steels because our
product portfolio and standard of quality, together with the investment this
year in our sales and distribution network, provide a strong platform for
growth. We aim to further grow the special steel business through new customers
and applications, our entry into new market areas and product launches is
progressing well. This was already slightly reflected in order volumes during
the second quarter.

The Building Products business area has a good market position and is seeking
growth especially from energy-efficient products and residential roofing
products. We are also focusing on repeatable products and processes, and seeking
new business opportunities for our good infrastructure construction products to
improve profitability. In Ruukki Building Systems, our main aim is to turn the
business back to profitability by the end of the year.

My expectations for 2013 are somewhat optimistic thanks to our actions to
improve efficiency and the business choices we have made, even though we still
cannot expect any significant help from a pick-up in the market. Comparable net
sales in 2013 are estimated to be at the same level as in 2012. Comparable
operating profit is estimated to improve compared to 2012 and to be positive."

Rautaruukki Corporation's full interim report for January-June 2013 is attached
to this release.

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

News conference for analysts and the media
A joint news conference in English both for analysts and the media will be
hosted on Thursday 8 August at 10.30 am at Ruukki's head office, Suolakivenkatu
1, 00810 Helsinki.

A live webcast of the event and the presentation by the company's President &
CEO Sakari Tamminen may be followed online on the company website at
www.ruukki.com/Investors starting at 10.30 am EEST. This event can also be
attended through a conference call by dialling the number below 5-10 minutes
before the scheduled time:
+44 207 1620 177 (calls outside Finland)
+358 9 2313 9202 (calls inside Finland)
Access code: 934316

A replay of the webcast can be viewed on the company's website from
approximately 4pm EEST.
A replay of the conference call will be available until 16 August 2013 at:
+44 20 7031 4064 (calls outside Finland)
+358 9 2314 4681 (calls inside Finland)
Access code: 934316

Rautaruukki Corporation
Taina Kyllönen
SVP, Marketing and Communications

Ruukki specialises in steel and steel construction. We provide customers with
energy-efficient steel solutions for better living, working and moving. We have
around 9,000 employees and an extensive distribution and dealer network across
some 30 countries including the Nordic countries, Russia and elsewhere in Europe
and the emerging markets, such as India, China and South America. Net sales in
2012 totalled €2.8 billion. The company's share is quoted on NASDAQ OMX Helsinki
(Rautaruukki Oyj: RTRKS). www.ruukki.com

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


[HUG#1721910]

Attachments:

Rautaruukki Corporation Interim Report H1 2013.pdf