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EANS-News: RHI AG
Results of the third quarter 2016

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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 
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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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