Rautaruukki Corporation's Interim Report for January-March 2009: Difficult market conditions considerably weakened result, financial position remained strong

 

First quarter of 2009 in brief:

 

- Demand for steel products fell sharply in all customer industries and markets.

- Growing uncertainty impacted on customers' investment decisions and the poor functioning of the financial markets was reflected in the difficulty of customers in arranging funding, which in turn weakened sales, especially of construction solutions.

- Demand weakened in the engineering industry, especially in the lifting, handling and transportation equipment industry. High stock levels throughout the supply chain weakened demand.

- Good demand continued from equipment manufacturers in the energy industry both in wind and diesel power plants. 

- The weakening of a number of sales currencies against the euro reduced consolidated net sales.

- The company's cash flow was good and its financial position remained strong.

- The impact on costs of operational efficiency actions and adjustment measures under way are expected to be seen during the second half of the year.

 

President & CEO Sakari Tamminen:

 

"Market conditions remained extremely difficult throughout the first quarter in all our customer industries.

Poor earnings performance during the first quarter was due not only to weak demand, but also to the low capacity utilisation rate in steel production. Low production capacity utilisation had an impact of around EUR 90 million on costs. Also the unwinding of stock levels produced at high raw material prices weakened our profitability. Also the impact of weakened currencies in countries in which the company operates was also reflected in net sales development.

 

We reacted to weak market conditions by initiating measures to adjust operations and improve efficiency corporate-wide. Only one of our two blast furnaces was operative in steel production and activities and costs in all divisions and corporate management and business support functions were adjusted to market conditions. We also continued with actions under our operational excellence programme Boost, which is aimed at helping us to achieve permanent long-term improvements in efficiency and profitability. Actions already initiated did not yet have any material impact on the result for the first quarter, but will lighten our cost structure from the second quarter onwards. The Boost programme and other adjustment measures already under way are expected to deliver cost savings of more than 80 million euros for the whole of 2009.

 

In April, after the report period, we announced that plans are under way to bring the modernisation of blast furnace 1 at the Raahe Works in Finland forward by three months so that work starts in April 2010. Even though we do not yet see any clear signs of a market recovery in the short term, we are restarting the idle blast furnace to prepare for disruption to production caused by downtime during the modernisation project. Restarting blast furnace 1 is justified also to safeguard customer deliveries. Restarting the blast furnace will also increase the steel production capacity utilisation rate and thus clearly improve our cost efficiency during the second half of the year," says President & CEO Sakari Tamminen.

The company expects net sales for the second quarter to be similar to those for the first quarter. The result before taxes for the second quarter is expected to remain clearly negative, although to show some improvement on the result for the first quarter.

 

Based on efficiency actions and adjustment measures already under way, estimated lower costs of raw materials used in steel production and improved cost efficiency in steel production, the company considers that it has the potential to achieve a positive result before taxes during the second half of the year.

 

 

FOR FURTHER INFORMATION, PLEASE CONTACT:

 

Sakari Tamminen, President & CEO, tel. +358 20 592 9075

Mikko Hietanen, CFO, tel. +358 20 592 9030

 

 

Press conference on the interim report on Thursday 23 April at 1.30pm

 

A press conference for analysts and the media, in Finnish, will be held on Thursday 23 April at 1.30pm at Ruukki, Suolakivenkatu 1, 00810 Helsinki.

 

The English webcast and conference call for investors and analysts will begin at 4pm Finnish time and can be viewed live on the company's website at www.ruukki.com/investors. A replay of the webcast can be viewed on the same site from about 8pm Finnish time.

To attend the conference call, please call the number below 5-10 minutes before the conference begins:
+44 (0)20 7162 0025

Password: Rautaruukki

A recording of the conference call can be heard until 26 April 2009 at the number below:

+44 (0)20 7031 4064

Access code: 832120

 

Rautaruukki Corporation

Anne Pirilä

SVP, Corporate Communications and Investor Relations

 

Rautaruukki supplies metal-based components, systems and integrated systems to the construction and engineering industries. The company has a wide selection of metal products and services. Rautaruukki has operations in 26 countries and employs 13,300 people. Net sales in 2008 totalled EUR 3.9 billion. The company's share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS). The Corporation uses the marketing name Ruukki. www.ruukki.com  

 

 

DISTRIBUTION:

NASDAQ OMX Helsinki

Main media

www.ruukki.com