RHI AG

EANS-News: RHI AG
Results of the third quarter 2015, EBIT affected by the devaluation of the Brazilian real in the amount of EUR 10.4 million

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quarterly report

In the first nine months of the year 2015, the RHI Group's revenue was up 4.6%
on the comparative period of 2014 and amounted to EUR 1,312.5 million. Revenue
of the Steel Division rose by 3.3%, mainly because of positive currency
translation effects and a strong business development in India and South
America. The Industrial Division's increase in revenue by 9.8% compared with the
first nine months of the year 2014 is amongst other things due to higher project
deliveries in the business units glass and environment, energy, chemicals.
 
The operating EBIT of the RHI Group amounted to EUR 91.4 million in the first
nine months of the current year. Compared with the operating EBIT of EUR 100.1
million in the same period of 2014, this corresponds to a decline by 8.7%. While
the Industrial Division benefited from a better utilization of fixed costs
resulting from the increment in revenue, an improved margin situation of the
glass business unit and several major repairs in the nonferrous metals business
unit, the operating EBIT in the Steel Division decreased due to a weaker margin
development in Europe and in the Middle East as well as negative product mix
effects related to a volume decline in the electric steel segment. The Raw
Materials Division's lower contribution to earnings is attributable to weaker
capacity utilization at the raw material plants related to the declining volumes
in the electric steel sector. The operating EBIT margin decreased from 8.0% in
the first nine months of the year 2014 to 7.0% in the current financial year.
 
Q3/2015
In the third quarter of 2015, revenue of the RHI Group declined by 14.1%
compared with the second quarter of 2015 and amounted to EUR 410.5 million. This
is attributable to seasonally weaker business activities in Europe during the
summer months, a weak business development in the electric steel segment in the
Middle East in the Steel Division and to lower project deliveries in the
business units environment, energy, chemicals as well as glass.
 
The operating EBIT amounted to EUR 22.8 million in the past quarter and declined
primarily due to negative exchange rate effects related to the valuation of
balance sheet items in the amount of EUR 10.4 million, which predominantly
resulted from the devaluation of the Brazilian real and are recorded under other
expenses. The market environment of the Steel Division is characterized by an
aggressive export strategy of Chinese producers resulting from weak domestic
demand and high excess capacities. Accordingly, this led to high pressure on
steel prices and thus on manufacturers' profitability and subsequently also on
suppliers. Due to the lower fixed cost structure compared with integrated steel
plants, the Chinese exports have a negative impact especially on the utilization
rates in the electric steel segment. This caused a negative effect on the
development of sales volume of the Steel Division in this important customer
segment. In the financial year 2014 the Steel Division generated revenue of
roughly EUR 275 million in the electric arc furnace segment compared with
revenue of roughly EUR 110 million in the basic oxygen converter segment.
Important products for the electric steel industry are hearth construction and
gunning mixes. In this segment, RHI has its own raw materials, which are mined
at the Austrian sites in Breitenau und Hochfilzen. Consequently, the decline in
sales volume additionally resulted in a weak capacity utilization of the raw
material plants.
 
Despite a significant decrease in trade payables in the third quarter of 2015,
the positive trend of working capital reduction continued. Net cash flow from
operating activities rose to EUR 91.8 million in the first nine months of the
year 2015, after it had amounted to EUR 40.1 million in the comparative period
of 2014. Net debt declined from EUR 466.9 million at the end of 2014 to EUR
445.6 million at September 30, 2015 due to the positive cash flow development.
 
Outlook
The difficult economic framework conditions in many customer industries lead to
uncertainties regarding the delivery of refractory products and the completion
of customer projects by the end of the year, thus making it more difficult to
plan the refractory business. Nevertheless, RHI still expects an increase in
revenue by more than 3% for the year 2015. Due to negative exchange rate effects
related to the valuation of balance sheet items of EUR 10.4 million in the third
quarter of 2015, reaching an operating EBIT margin of roughly 8% is becoming
increasingly challenging.
 


in EUR million                    9M/15   9M/14    Delta     3Q/15 2Q/15 Delta
Revenue                           1,312.5 1,254.7  4.6%      410.5 477.9 (14.1)%
EBITDA                            142.3   147.6 1) (3.6)%    39.8  51.3  (22.4)%
EBITDA margin                     10.8%   11.8%    (1.0)pp   9.7%  10.7% (1.0)pp
Operating EBIT 2)                 91.4    100.1    (8.7)%    22.8  34.1  (33.1)%
Operating EBIT margin             7.0%    8.0%     (1.0)pp   5.6%  7.1%  (1.5)pp
EBIT                              91.4    97.4     (6.2)%    22.8  34.1  (33.1)%
EBIT margin                       7.0%    7.8%     (0.8)pp   5.6%  7.1%  (1.5)pp
Profit before income tax          82.1    80.7     1.7%      19.1  33.1  (42.3)%
Profit from continuing operations 56.0    51.6     8.5%      11.4  23.5  (51.5)%
                                                                          
1) adjusted for income from the reversal of investment subsidies recognized as
liabilities
2) EBIT before impairment and restructuring expenses and result from Chapter 11
proceedings
 
 
The report for the third quarter of 2015 is available for download at the RHI
website: www.rhi-ag.com/ Investor Relations / Financial Reports

Further inquiry note:
RHI AG  
Investor Relations
Mag. Simon Kuchelbacher
Tel: +43-1-50213-6676
Email: simon.kuchelbacher@rhi-ag.com

end of announcement                               euro adhoc 
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company:     RHI AG
             Wienerbergstrasse 9
             A-1100 Wien
phone:       +43 (0)50213-6676
FAX:         +43 (0)50213-6130
mail:     rhi@rhi-ag.com
WWW:      http://www.rhi-ag.com
sector:      Refractories
ISIN:        AT0000676903
indexes:     ATX Prime, ATX
stockmarkets: official market: Wien 
language:   English
 

 


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