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2012-04-24 08:00:00 CEST 2012-04-24 08:00:58 CEST REGULATED INFORMATION Rautaruukki - Interim report (Q1 and Q3)Rautaruukki Corporation Interim report Q1/2012: Order intake and cash flow continued to be good during the first quarter - the priority for 2012 is to improve profitabilityRautaruukki Corporation Interim report 24 April 2012 at 9am EEST January-March 2012 (Q1/2011) - Net cash flow from operating activities was EUR 54 million (6). - Order intake was up 2 per cent at EUR 686 million (674). - Comparable net sales were up 4 per cent at EUR 699 million (675). - Comparable operating profit was -EUR 15 million (25). - Comparable result before taxes was -EUR 26 million (14). Guidance for 2012 unchanged Net sales in 2012 are estimated to grow about 5 per cent. Comparable operating profit is estimated to improve compared to 2011. KEY FIGURES ---------------------------------------------------------------------- Q1/2012 Q1/2011 2011 ---------------------------------------------------------------------- Comparable figures Comparable net sales, EUR m 699 675 2 797 Comparable operating profit, EUR m -15 25 56 Comparable operating profit as % of net sales -2.2 3.7 2.0 Comparable result before income tax, EUR m -25 14 22 Reported figures Reported net sales, EUR m 702 675 2 798 Reported operating profit, EUR m -16 25 22 Reported result before income tax, EUR m -26 14 -12 Net cash from operating activities, EUR m 54 6 114 Net cash before financing activities, EUR m 32 -29 -57 Earnings per share, EUR -0.14 0.06 -0.07 Return on capital employed (rolling 12 months), % -0.6 2.7 1.3 Return on capital employed (annualised), % -2.7 5.0 1.3 Gearing ratio, % 68.0 50.3 60.4 Equity ratio, % 46.2 49.3 48.5 Personnel on average 11 350 11 436 11 821 ---------------------------------------------------------------------- President & CEO Sakari Tamminen: The first quarter of 2012 began on a positive note, but uncertainty returned towards the end of the report period when growth forecasts for China were revised downwards and, in the eurozone, confidence in Spain and Italy's economic growth weakened again. The good note during the first weeks saw a return to a slower growth track towards the end of the quarter. However, the construction season has got off to a good start in Ruukki and with higher average selling prices in our steel business towards the end of the report period, I believe that we are well placed for the rest of the year. Strong cash flow, both year on year and quarter on quarter, was a positive aspect at Ruukki during the first quarter. After capital expenditure, cash flow was EUR 32 million in the black. Order intake was also up slightly compared to a year earlier. Compared to the previous quarter, order intake was up 5 per cent, which was attributable to the steel business in particular picking up. Our net sales showed year-on-year growth of 4 per cent. Our profitability was not at a satisfactory level. Operating profit rose quarter on quarter, but weakened clearly compared to a year earlier, when our steel business posted a good result. Average prices in the steel business declined further at the start of the year, although began to rise towards the end of the quarter. Also order intake prices rose steadily during the quarter. The construction business improved year on year, but due to normal seasonality still made a loss. Our engineering business improved slightly, but still showed a loss. We are now focusing on permanently improving the cost structure and level across all our businesses, and on improving cost flexibility through efficiency projects. A project initiated in the steel business in February is aimed at a permanent improvement of EUR 50 million in earnings performance. To date, around EUR 35 million in points for efficiency improvement have been identified in sales and marketing, financial and HR administration, other support functions as well as production, the use of raw materials and supplies, and in maintenance and other services purchased. Of those points identified, actions having an impact of around EUR 9 million are already ongoing and include, for example, improving the efficiency of product transportation in Finland and the use of raw materials in iron-making. To achieve the full target, the project will continue by reviewing points for improvement already identified and by improving, among other things, the performance of prefabrication and distribution operations. Decisions about all actions to be initiated will be made by mid-May and we expect to achieve the targeted improvement in earnings performance as a result. We are also initiating a similar project in the construction business, where improvement in operating profit has been too slow compared to volume growth. The project aims to achieve a permanent improvement of EUR 20 million in earnings performance. This will be achieved by, for example, optimising the supply chain and material flows, as well as by improving the efficiency of sales and marketing and support operations. Some of the actions, such as withdrawal from unprofitable markets in Central Eastern Europe and defining the business model in the project business, are already under way. We have now increased our permanent improvement in earnings performance target from EUR 50 million to a total of EUR 70 million. It is estimated that improved operational efficiency will be visible in the form of improved earnings performance starting 2012, but mainly during the first quarter of 2013 and in full from the third quarter onwards. On top of this, we have decided to discontinue manufacturing cabins and components in Shanghai by the end of the third quarter. In future, our engineering business will focus on developing its European operations in Finland, Poland, Slovakia and Hungary. Ending cabin and component manufacturing at the Shanghai unit will not significantly affect Ruukki Engineering's net sales, but will improve profitability. The Shanghai unit posted a loss of EUR 7 million for 2011. The presence of our steel business in China will be strengthened and a new steel service centre will be set up in Shanghai using the machine capacity and premises vacated by the engineering business. This is to speed up implementation of our special steel strategy by strengthening sales of Ruukki Raex wear- resistant steels and Ruukki Optim high-strength steels in China. We expect demand for construction products to grow. Strongest growth is expected in residential construction products, and in both the Russian and Polish markets. In the engineering industry, we anticipate demand from mining industry machinery and equipment manufacturers and demand from heavy cargo handling and other materials handling equipment manufacturers to be at a good level. Order intake, average prices and utilisation rates in the steel industry rose in Europe during the first quarter due to improved market conditions at the end of last year. We forecast that sales by our service centres will continue to be at a good level and that direct mill deliveries will pick up somewhat. Stock levels in the steel industry are at a normal level compared to sales and we expect a moderate rise in average selling prices of steel products. We repeat our guidance for 2012. Net sales are estimated to grow about 5 per cent. Comparable operating profit is estimated to improve compared to 2011. Rautaruukki Corporation's full interim report for January-March 2012 is attached to this release. For further information, please contact: Sakari Tamminen, President & CEO, tel. +358 20 592 9075 Markku Honkasalo, CFO, tel. +358 20 592 8840 Rautaruukki will host two news conferences on Tuesday 24 April at Restaurant Palace, Merisali Cabinet, Eteläranta 10, 00130 Helsinki A presentation for analysts in English will be held starting at 10.30am EEST. A live webcast of the presentation may be followed online on the company's website at www.ruukki.com/Investors. The event can also be followed through a conference call by dialling the number below 5-10 minutes before the scheduled time: +44 20 7162 0025 (calls outside Finland) 09 2313 9201 (calls inside Finland) Access code: 914137 A replay of the webcast can be viewed on the company's website from approximately 2pm EEST. A replay of the conference call will be available until 1 May 2012 at: +44 20 7031 4064 (calls outside Finland) 09 2314 4681 (calls inside Finland) Access code: 914137 A press conference for the media in Finnish will be held at 12 noon EEST. Rautaruukki Corporation Taina Kyllönen SVP, Marketing and Communications Ruukki provides its customers with energy-efficient steel solutions for better living, working and moving. Ruukki operates in some 30 countries and employs around 11,800 people. Net sales in 2011 totalled EUR 2.8 billion. The company's share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS). DISTRIBUTION: NASDAQ OMX Helsinki Main media www.ruukki.com [HUG#1605264] |
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