EANS-News: RHI AG
Results of the third quarter 2016
08.11.2016 – 07:31
-------------------------------------------------------------------------------- Corporate news transmitted by euro adhoc. The issuer/originator is solely responsible for the content of this announcement. -------------------------------------------------------------------------------- 9-month report In the first nine months of 2016, the RHI Group's revenue dropped by 6.5% compared with the same period of 2015 and amounted to EUR 1,227.3 million. In the Steel Division revenue declined by 4.6% due to a weaker business development in South America, Europe and China and the opening of the product portfolio to lower-performance products. These products support the sales volume and margin development, but lead to lower revenue due to the lower price level. In the Industrial Division the decrease in revenue of 11.3% compared with the same period of 2015 is among other things due to lower deliveries in the cement/lime and environment, energy, chemicals business units. Despite the decline in revenue, the operating EBIT rose by 7.2% from EUR 91.4 million in the first nine months of 2015 to EUR 98.0 million in the current financial year. This development is primarily attributable to a positive earnings situation in the Steel Division due to favorable product mix effects and better utilization of the production capacities resulting from the increase in sales volume. In addition, the operating EBIT of the Raw Materials Division improved due to good capacity utilization at the Austrian raw material plants, which predominantly produce basic mixes for the steel industry, especially for the use in electric arc furnaces. Overhead cost savings also supported the earnings development. In contrast, the Industrial Division's operating EBIT was lower than in the previous year due to a decline in revenue. The RHI Group's operating EBIT margin increased from 7.0% in the first nine months of 2015 to 8.0% in the current financial year. EBIT amounted to EUR 101.1 million in the first nine months of 2016 and includes negative effects on earnings of EUR 4.6 million from the deconsolidation of the US subsidiary RHI Monofrax, LLC following the sale to the German private equity fund Callista, and EUR 3.6 million related to the social plan for staff layoffs and changes in the production portfolio at the site in Porsgrunn, Norway. In contrast, a positive effect of EUR 11.3 million resulted from the measurement of the power supply contract in Norway. Free cash flow amounted to EUR 75.5 million in the first nine months of 2016, after EUR 74.8 million in the comparative period of 2015. Net debt declined from EUR 397.9 million at the end of the financial year 2015 to EUR 364.0 million at September 30, 2016. The number of employees decreased from 7,898 at the end of the year 2015 to 7,568. Q3/2016 In the third quarter of 2016, revenue dropped by 9.9% to EUR 397.1 million compared with the strong second quarter of 2016. This is attributable to seasonally weaker business in Europe during the summer months and a weaker business development in the Middle East in the Steel Division as well as a decrease in project deliveries in the environment, energy, chemicals, and nonferrous metals business units. As a result of declining revenue, the operating EBIT dropped from EUR 39.9 million in the second quarter of 2016 to EUR 27.8 million in the past quarter. In addition, external expenses of EUR 3.7 million related to the planned combination of RHI and Magnesita incurred in the third quarter of 2016 had a negative impact on the earnings development. These expenses totaled EUR 3.9 million in the first nine months of 2016. EBIT amounted to EUR 32.5 million in the third quarter of 2016 and includes costs of EUR 3.6 million for the social plan and the changes in the production portfolio as well as positive net effects from the power supply contract in Norway. Based on own use, the sale at market prices and an increase in electricity future prices, financial liabilities of EUR 8.3 million were reversed. Income tax expenses in the past quarter were positively influenced by the reversal of a provision of EUR 6.3 million related to a tax audit in Turkey. Outlook For the full year 2016, the Management Board of the RHI Group expects revenue below the level of the past financial year if the macroeconomic environment and exchange rates remain stable. The operating EBIT margin is expected to reach roughly 8%, adjusted for external expenses related to the planned combination of RHI and Magnesita, which corresponds to an increase by roughly one percentage point compared with the previous year. Should the current evaluation regarding the optimization of the plant structure provide first decision-relevant results in the fourth quarter of 2016, this may lead to non-cash impairment losses of a maximum of EUR 10 million. The planned continuation of the reduction of working capital and different cost measures in the sales and general administrative departments should support the generation of free cash flow and lead to a further reduction of net debt. in EUR million 9M/16 9M/15 Delta 3Q/16 2Q/16 Delta Revenue 1,227.3 1,312.5 (6.5)% 397.1 440.5 (9.9)% EBITDA 148.7 142.3 4.5% 48.1 57.4 (16.2)% EBITDA margin 12.1% 10.8% 1.3pp 12.1% 13.0% (0.9)pp Operating EBIT 1) 98.0 91.4 7.2% 27.8 39.9 (30.3)% Operating EBIT margin 8.0% 7.0% 1.0pp 7.0% 9.1% (2.1)pp EBIT 101.1 91.4 10.6% 32.5 41.5 (21.7)% EBIT margin 8.2% 7.0% 1.2pp 8.2% 9.4% (1.2)pp Profit before income tax 92.0 82.1 12.1% 29.1 39.1 (25.6)% Profit after income tax 64.0 56.0 14.3% 25.1 24.1 4.1% 1) EBIT before expenses from derivatives from supply contracts, impairment and restructuring effects The report for the third quarter of 2016 is available for download on 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 -------------------------------------------------------------------------------- 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