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RHI AG

EANS-News: RHI AG
Preliminary results 2016

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annual result

The RHI Group's revenue amounted to EUR 1,651.2 million in the past financial
year compared with EUR 1,752.5 million in the year 2015. This decline is
primarily attributable to the continued moderate steel production and lower
project deliveries in the business segments outside the steel industry.  
 
The operating EBIT amounted to EUR 123.2 million in the past financial year and
was maintained at the level of 2015 despite weak markets and one-off costs of
roughly EUR 12 million related to the planned combination with Magnesita. This
positive operating business development is predominantly attributable to the
good earnings situation in the Steel Division, the improved operating EBIT in
the Raw Materials Division due to good capacity utilization at the Austrian raw
material plants and cost reductions in all areas of the company.
 
EBIT amounted to EUR 116.1 million in the past financial year and includes a
full impairment of the assets of the two production sites for fused cast
products for the glass industry totaling EUR 8.0 million. Moreover, negative
effects on earnings of EUR 4.6 million from the deconsolidation of the US
subsidiary RHI Monofrax, LLC following its sale and EUR 4.8 million related to
the social plan for personnel cuts and the reorganization of the production
portfolio at the Norwegian site in Porsgrunn are included. In contrast, a
positive effect of EUR 10.1 million resulted from the measurement of the power
supply contract in Norway.  
 
Finance costs amounted to EUR (21.2) million in the year 2016 and the tax rate
was 28.3%. Profit after income taxes amounted to EUR 75.9 million and earnings
per share to EUR 1.86.
 
Financial and asset position
Due to the further reduction of working capital by roughly 13% and the good
operating performance, free cash flow of EUR 109.8 million was generated and net
financial liabilities were reduced from EUR 397.9 million in 2015 to EUR 332.8
million in 2016. Net financial liabilities correspond to roughly 1.8 times the
EBITDA of the year 2016. The RHI Group's equity amounted to EUR 524.0 million at
December 31, 2016 compared with EUR 491.4 in the previous year. The equity ratio
improved from 27.2% to 29.2% in the year 2016.
 
Steel Division
The Steel Division's sales volume rose by 4.9% from roughly 1,152,000 tons in
the previous year to roughly 1,209,000 tons in the past financial year. This is
primarily attributable to a significant expansion of business in the basic mixes
segment, the most important segment in terms of volume. In addition to a major
contract in Ukraine, the improved utilization of electric steel plants also
contributed to this development. Revenue declined by 2.6% from EUR 1,099.9
million in the previous year to EUR 1,071.4 million despite the increase in
sales volume, above all due to product mix effects. This is attributable to a
weaker business development in South America, Europe and China and to the
extension of the product portfolio by lower-performance products. Although these
products support the development of sales volume and margins, they lead to lower
revenue because of the lower price level. The operating EBIT improved from EUR
64.3 million in the previous year to EUR 76.2 million in the past financial year
due to better utilization of the production capacities and a positive margin
development in nearly all regions. It includes external costs of roughly EUR 8
million for the financial year 2016, which are related to the planned
combination of RHI und Magnesita.
 
Industrial Division
Sales volume in the Industrial Division declined by 3.4% compared with the
previous year and is attributable to lower deliveries in nearly all business
units. Revenue dropped by 12.4% from EUR 614.6 million in the previous year to
EUR 538.6 million. In the cement/lime business unit, these reductions result
from the lack of new construction projects and a declining construction industry
in China, and in the glass business unit from the sale of the US subsidiary RHI
Monofrax, LLC in June 2016. In the environment, energy, chemicals business unit,
a major contract in the coal and petroleum coke gasifier segment in India
delivered in the previous year was not compensated. The decline in revenue in
the nonferrous metals business unit is based on weaker demand in the important
copper and nickel segment. The operating EBIT dropped from EUR 65.0 million in
2015 to EUR 44.5 million in the past financial year due to lower deliveries and
the resulting weaker utilization of production capacities. It includes external
expenses of roughly EUR 4 million in the year 2016, which are related to the
planned combination of RHI and Magnesita.
 
Raw Materials Division
The Raw Materials Division's external sales volume rose significantly from
roughly 297,000 tons in the previous year to roughly 342,000 tons in the past
financial year. The increase by 15.2% is above all attributable to the increase
in the sale of raw dolomite in Italy, which makes a large contribution in terms
of volume. However, due to the low price per ton, the contribution in terms of
value is minor. Revenue decreased by 2.4% from EUR 272.6 million in the previous
year to EUR 266.0 million in the past financial year. The operating EBIT turned
around from EUR (5.2) million to EUR 2.5 million in the past financial year,
mainly because of the good capacity utilization at the two Austrian raw material
plants, which predominantly produce basic mixes for the steel industry,
especially for the use in electric arc furnaces. This is an immediate effect of
the Steel Division's increase in sales volume in this product segment by more
than 9% compared with the previous year to more than 500,000 tons.
 
Outlook
In its forecast published in January 2017, the International Monetary Fund
expects global economic growth of 3.4% in the current year after 3.1% in 2016.
However, there is considerable uncertainty regarding the effects of the policies
of the newly elected US government. Although the environment in the advanced
economies improved in the second half of 2016, the pace of growth in the
emerging markets will continue to exercise a significant influence on the global
economic situation. Based on a study of mid-November 2016, the research
institute CRU expects steel production in China to decline by roughly 2% in the
year 2017 and steel production outside China to grow by an ambitious 6%. The
emerging markets are also among the main drivers in this area. Based on these
estimates, RHI expects a more positive market environment in 2017. The focus
will stay on the generation of free cash flow in the current financial year in
order to reduce net debt further. RHI is currently working on meeting the
conditions precedent to the successful closing of the planned combination with
Magnesita and is preparing the integration of the two companies. In the context
of these activities, external costs will be incurred. The Management Board of
RHI AG intends to propose a dividend of EUR 0.75 per share to the Annual General
Meeting on May 5, 2017, the same as in the previous year.
 
 
Preliminary Key Figures 2016


                             2016    2015    Delta      4Q/16  4Q/15    Delta
Sales volume (thousand tons) 1,979   1,892   4.6%       511    488      4.7%
Steel Division               1,209   1,152   4.9%       300    269      11.5%
Industrial Division          428     443     (3.4)%     131    136      (3.7)%
Raw Materials Division       342     297     15.2%      80     83       (3.6)%
                                                                         
in EUR million                                                           
Revenues                     1,651.2 1,752.5 (5.8)%     423.9  440.0    (3.7)%
Steel Division               1,071.4 1,099.9 (2.6)%     268.2  257.8    4.0%
Industrial Division          538.6   614.6   (12.4)%    145.1  171.2    (15.2)%
Raw Materials Division                                                   
External revenues            41.2    38.0    8.4%       10.6   11.0     (3.6)%
Internal revenues            224.8   234.6   (4.2)%     51.7   49.9     3.6%
EBITDA                       189.1   140.0   35.1%      40.4   (2.3)    1,856.5%
EBITDA margin                11.5%   8.0%    3.5pp      9.5%   (0.5)%   10.0pp
Operating EBIT 1)            123.2   124.1   (0.7)%     25.2   32.7     (22.9)%
Steel Division               76.2    64.3    18.5%      13.1   13.6     (3.7)%
Industrial Division          44.5    65.0    (31.5)%    13.9   24.3     (42.8)%
Raw Materials Division       2.5     (5.2)   148.1%     (1.8)  (5.2)    65.4%
Operating EBIT margin        7.5%    7.1%    0.4pp      5.9%   7.4%     (1.5)pp
Steel Division               7.1%    5.8%    1.3pp      4.9%   5.3%     (0.4)pp
Industrial Division          8.3%    10.6%   (2.3)pp    9.6%   14.2%    (4.6)pp
Raw Materials Division 2)    0.9%    (1.9)%  2.8pp      (2.9)% (8.5)%   5.6pp
EBIT                         116.1   37.5    209.6%     15.0   (53.9)   127.8%
Steel Division               76.3    63.4    20.3%      13.2   12.7     3.9%
Industrial Division          32.0    58.9    (45.7)%    6.0    18.2     (67.0)%
Raw Materials Division       7.8     (84.8)  109.2%     (4.2)  (84.8)   95.0%
EBIT margin                  7.0%    2.1%    4.9pp      3.5%   (12.3)%  15.8pp
Steel Division               7.1%    5.8%    1.3pp      4.9%   4.9%     0.0pp
Industrial Division          5.9%    9.6%    (3.7)pp    4.1%   10.6%    (6.5)pp
Raw Materials Division 2)    2.9%    (31.1)% 34.0pp     (6.7)% (139.2)% 132.5pp
Net finance costs            (21.2)  (19.3)  (9.8)%     (4.7)  (3.3)    (42.4)%
Share of profit of joint
ventures                     10.9    9.2     18.5%      3.5    2.5      40.0%
Profit before income tax     105.8   27.4    286.1%     13.8   (54.7)   125.2%
Income taxes                 (29.9)  (9.8)   (205.1)%   (1.9)  16.3     (111.7)%
Income taxes in %            28.3%   35.8%   (7.5)pp    13.8%  29.8%    (16.0)pp
Profit for the year          75.9    17.6    331.3%     11.9   (38.4)   131.0%
                                                                         
Earnings per share in EUR 3) 1.86    0.40               0.29   (0.98)    
                                                                         


1) EBIT before losses of derivatives from supply contracts, impairment losses
and restructuring effects
2) based on internal and external revenues
3) basic and diluted
 
 


Preliminary key figures (in EUR million)  2016    2015    Delta
Balance sheet total                       1,792.2 1,804.5 (0.7)%
Equity                                    524.0   491.4   6.6%
Equity ratio (in %)                       29.2%   27.2%   2.0pp
Investments in PP&E and intangible assets 70.8    80.8    (12.8)%
Net debt                                  332.8   397.9   (16.4)%
Gearing ratio (in %)                      63.5%   81.0%   (17.5)pp
Net debt / EBITDA                         1.8     2.8     (1.0)
Working capital                           465.1   532.6   (12.7)%
Working capital (in %)                    28.2%   30.4%   (2.2)pp
Capital employed                          1,095.8 1,176.5 (6.9)%
Return on average capital employed (in %) 7.6%    2.3%    5.3pp
Net cash flow from operating activities   162.7   175.4   (7.2)%
Net cash flow from investing activities   (52.9)  (47.2)  (12.1)%
Net cash flow from financing activities   (80.7)  (124.4) 35.1%
                                                           

Gearing ratio: net debt / equity
Working Capital: Inventories + Trade receivables and receivables from long-term
construction contracts - Trade payables - Prepayments received
Capital Employed: Property, plant and equipment + Goodwill + Other intangible
assets + Working Capital
Return on average capital employed: (EBIT - Taxes) / average Capital Employed

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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