Rautaruukki Corporation's interim report for Ja...

Rautaruukki Corporation Interim report 22 October 2009 at 12 noon

Summary results for the first nine months of 2009 (reference period
Q1-Q3/2008)
- Consolidated net sales decreased to EUR 1,429 million (EUR 3,004
million)
- Consolidated reported negative operating profit was -EUR 284
million and negative operating profit excluding non-recurring items
was -EUR 279 million (505 reported and 511 comparable)
- Result before taxes was -EUR 313 million (503)
- Gearing ratio was 26.4 per cent (7.8)
- Cash flow from operating activities was EUR 69 million (284)
- Return on capital employed (rolling 12 months) was -10.0 per cent
(29.6)
- Earnings per share were -EUR 1.65 (2.65)
- The company estimates there will be a marked improvement in the
result before taxes for the fourth quarter, compared to the third
quarter, but that the result might remain slightly negative. Earlier
the company estimated that there will be a marked improvement in the
result before taxes for the second half of the year compared to the
first half, but might remain slightly negative.


KEY FIGURES
                               Q1-Q3/09 Q1-Q3/08  Q3/09  Q3/08   2008
Net sales, EUR m                  1 429    3 004    485    996  3 851
Operating profit, EUR m            -284      505    -54    197    568
Operating profit, excluding
non-recurring items, EUR m         -279                           584
Operating profit as % of net
sales                             -19.9     16.8  -11.2   19.7   14.7
Operating profit as % of net
sales, excluding non-recurring
items                             -19.5                          15.3
Result before taxes, EUR m         -313      503    -64    195    548
Earnings per share, EUR           -1.65     2.65  -0.32   1.00   2.93
Return on capital employed
(rolling 12 mths), %              -10.0     29.6                 25.6
Gearing ratio, %                   26.4      7.8                  7.9
Personnel, average               12 914   15 086 12 413 15 285 14 953



First nine months of 2009 in brief:

- By the end of the report period, the three-year operational
excellence programme Boost had delivered permanent cost savings of
around EUR 46 million and savings for the whole year are estimated to
exceed EUR 60 million. Actions already initiated equate to cost
savings of around EUR 80 million at an annual level. In addition to
these actions, adjustment measures taken as a result of difficult
market conditions are estimated to deliver of around EUR 30 million
in 2009.

- Continued caution in construction investment decisions across the
market area. Positive signs were visible in the third quarter in
sales of roofing products, as well as in road and rail construction
projects in the Nordic countries.

- Market conditions in the engineering business were very
challenging, delivery volumes fell sharply and price development in
new contracts was unfavourable. However, deliveries to equipment
manufacturers in the energy industry continued at a good level.

- Delivery volumes of steel products remained exceptionally low and
no recovery was evident in end-customer demand. Lower customer stocks
increased orders somewhat and the fall in prices of steel products
levelled off during the third quarter.

- Cash flow from operating activities was positive and a healthy
balance sheet was maintained.


President & CEO Sakari Tamminen:

"The rate of decline in the global economy eased during the third
quarter of the year. A reduction in stocks has resulted in a brief
pick-up in demand in customer industries, but this has not yet formed
a platform for any permanent improvement in end-customer demand. It
still remains difficult to predict market development. It is clear
that the fallout from the global economic crisis will stretch far
into the future, industrial structures are changing and actors in the
engineering industry among others are pursuing cost efficiency in
countries with lower cost levels.

Ruukki's poor earnings performance during the report period was
mainly attributable to lower sales volumes, unfavourable sales price
development and to the use of steel material produced using high-cost
raw materials. Also the low steel production capacity utilisation
rate during the first half of the year significantly impacted on our
result.

Despite difficult market conditions, seasonal demand picked up
somewhat in Ruukki's construction businesses during the third
quarter. Nevertheless, we remained well below the level witnessed in
previous years and commercial and industrial construction in
particular was quiet. Especially in Russia, publicly funded projects
accounted for a notably increased share of our net sales in
construction. In addition, activity in road and rail projects in the
Nordic countries and in residential construction was even brisker
than anticipated.

Delivery volumes in the engineering industry were significantly
smaller than a year earlier. The profitability of our engineering
business was particularly weakened by the poor performance of the
Norwegian unit and we have accordingly started to reorganise the
operations of the unit, which earlier primarily served the
shipbuilding industry.

There was major fluctuation in demand for different products in our
steel business. Whilst sales volumes of plate products in particular
were low, sales of further processed colour-coated and galvanised
products and strip products were much better. There was even a
shortage of some products at times and the stock cycle improved
towards the end of the report period. However, de-stocking was slower
than anticipated.

We have built the company to be able to face challenging times from a
strong platform. This year, we have lowered our cost structure
through corporate-wide efficiency and saving measures, as well as
progressed with our three-year operational excellence programme. We
will continue to improve efficiency to further strengthen our cost
competitiveness and market position. Our manufacturing network and
local presence in Poland, Hungary and China, for example, provide
Ruukki with a competitive edge in the engineering business in the
future. There is a strong need for new and renovation construction in
our important market area in Eastern Europe. However, in the
short-term, we need to see a restoration of customer willingness to
invest before commercial and industrial construction picks up.

Our three-year operational excellence programme has progressed faster
than expected and by the end of September had delivered permanent
cost savings of around EUR 46 million. Expected savings for the whole
year have been revised upwards from EUR 50 million to over EUR 60
million. Efficiency measures we have initiated equate to savings of
around EUR 80 million at an annual level. Adjustment measures under
way, lower costs of raw materials and a decrease in the cost per unit
of steel produced will also improve our cost efficiency. We estimate
that there will be a marked improvement in the result before taxes
for the fourth quarter, compared to the third quarter, but that the
result might remain slightly negative".


For further information, please contact:
Sakari Tamminen, President & CEO, tel. [phone]
Mikko Hietanen, CFO, tel. [phone]


Press conference
A press conference, in Finnish, for analysts and the media will be
held on Thursday 22 October at 2.30pm 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 following number 5-10
minutes before the conference begins: [phone], password:
Rautaruukki

A recording of the conference call can be heard until 27 October 2009
at the following number:
[phone], access code: 846983

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 12,200 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.

DISTRIBUTION:
NASDAQ OMX Helsinki
Main media
www.ruukki.com



Rautaruukki Corporation's interim report for January-September 2009


Business environment

The pace of decline in the global economy slowed during the course of
the third quarter. However, there was continued caution in investment
decisions despite the strengthening of a number of confidence
indicators and a noticeable decrease in stocks of finished products.
Industrial orders remained well below the level a year earlier.

Seasonal growth in demand within construction was below that of
previous years. However, residential construction was brisker than
expected and this led to better demand for roofing products than
predicted. Customer caution in decision-making particularly impacted
on the demand for solutions and products within commercial and
industrial construction. The availability of debt financing for
construction projects was still difficult.

High stock levels in the engineering industry weakened demand during
the report period, especially in the lifting, handling and
transportation equipment industry. Even though customers' stocks have
decreased considerably, order intake volume showed hardly any
improvement. Demand from equipment manufacturers in the energy
industry remained relatively good, but equipment manufacturers in the
wind power industry have rescheduled or cancelled some projects
because of, among other things, the difficulty in securing funding.
Market conditions remained weak in shipbuilding and there were few
new orders. The trend within the engineering industry to pursue
further operational efficiency by switching production to lower cost
countries has gathered momentum during the year.

De-stocking in the steel industry has taken longer than expected.
Consequently, the delivery volumes of steel companies remained lower
than end-customer demand also during the third quarter. Particularly
weak demand for plate products continued also towards the end of the
report period. With the exception of China and some other Asian
countries, the global capacity utilisation rate in the steel industry
remained low throughout the report period.


Net sales for January-September

Unless otherwise stated, the comparable figures in brackets refer to
the same period a year earlier.

Consolidated net sales for January-September 2009 were EUR 1,429
million (EUR 3,004 million reported and EUR 2,981 million
comparable).

The solutions businesses - Ruukki Construction and Ruukki Engineering
- accounted for 49 per cent (46) of consolidated net sales during the
report period. Finland accounted for 31 per cent (32) of consolidated
net sales, the other Nordic countries for 31 per cent (32) and
Central Eastern Europe, Russia and Ukraine for 19 per cent (19). The
rest of Europe accounted for 13 per cent (13) of consolidated net
sales and other countries for 5 per cent (3).

Ruukki Construction's net sales for the first nine months of 2009
were EUR 442 million (818) and Ruukki Engineering's net sales were
EUR 263 million (578). Ruukki Metals' net sales were EUR 724 million
(EUR 1,608 million reported and EUR 1,585 million comparable).

Ruukki Construction's net sales development was affected by weak
demand throughout the report period. Business activity was
particularly low in commercial and industrial construction. There was
continued caution in investment decisions and noticeably fewer new
construction projects were started than in previous years. Net sales
of infrastructure construction declined less than those of commercial
and industrial construction because of the good level of activity in
road and rail construction projects in the Nordic countries. Seasonal
demand for residential roofing products was reasonably good, even
though market conditions were noticeably weaker than in previous
years.

Ruukki Engineering's delivery volumes fell sharply. Low end-customer
demand and de-stocking throughout the report period resulted in
decreased order intake. Net sales during the report period contracted
in all customer segments compared to a year earlier. The sharpest
fall in net sales was in the lifting, handling and transportation
equipment segment. Delivery volumes to shipbuilding and offshore
customers were also low. On the contrary, deliveries to equipment
manufacturers in the energy industry, both in wind and diesel power
plants, remained at a good level compared to other customer groups.

Ruukki Metals' delivery volumes of steel products remained
exceptionally low throughout the report period. De-stocking continued
and end-customer demand was weak. Sales of special steel products
fell more than those of other product groups during the report period
because of continued low activity in the main industrial sectors,
such as the heavy engineering industry, that use these products.
Special steel products accounted for 19 per cent (28) of the
division's net sales during the first nine months of the year. Prices
of steel products fell noticeably during the first half of the year.
During the third quarter, the fall in prices bottomed out in a number
of product groups as uncertainty faded about the cost of raw
materials used in steel production.


Third quarter net sales

Consolidated net sales for the third quarter were EUR 485 million
(996).

Ruukki Construction's third quarter net sales were EUR 164 million
(309). Seasonal demand for residential roofing products was
reasonably good and third quarter sales were brisker than earlier in
the year. Deliveries for commercial and industrial construction
remained low. In Russia, deliveries for construction projects in the
energy industry continued to be brisker than for those in other
industrial sectors.

Ruukki Engineering's third quarter net sales were EUR 63 million
(184). End-customer demand remained particularly low and, together
with de-stocking, decreased both order intake and the number of
deliveries also during the third quarter. Selling prices were also
down. A large proportion of the division's annual contracts expired
during the summer and prices under the new contracts were lower than
for the previous term of contract. This in turn weakened net sales
during the third quarter.

Ruukki Metals' third quarter net sales were EUR 257 million (503).
Lower customer stocks to some extent led to an increase in order
intake during the third quarter. Sales volume development in
colour-coated and galvanised strip products was noticeably better
than in plate products. Sales of trading products - stainless steel
and aluminium - picked up slightly during the third quarter, but were
still down compared to a year earlier.


Operating profit for January-September

Consolidated reported negative operating profit for January-September
was -EUR 284 and operating profit excluding non-recurring items was
-EUR 279 million (EUR 505 million reported and EUR 511 million
comparable). Both reported operating profit and operating profit
excluding non-recurring items equated to -20 per cent (17 per cent
reported and 17 per cent comparable) of net sales.

Ruukki Construction posted a negative operating profit of -EUR 26
million (115). Ruukki Engineering's reported negative operating
profit was -EUR 9 million (101) and negative operating profit
excluding non-recurring items was -EUR 4 million. Ruukki Metals'
negative operating profit was -EUR 238 million (EUR 309 million
reported and EUR 314 million comparable).

Ruukki Construction's operating profit fell as a result of lower
sales volumes coupled with lower selling prices. The use of own steel
produced at high raw material prices together with the use of
high-cost external material in stock weakened profitability
particularly during the first half of the year. Selling prices fell
in all market areas during the report period. The fall in prices
levelled off during the course of the third quarter.

Ruukki Engineering's operating profit in January-September was
weakened by lower delivery volumes, lower selling prices - especially
for plate products - as well as by the use, during the first half of
the year, of steel material made at high raw material prices. Due to
weak demand in the shipbuilding industry, profitability has been
particularly poor in the company's unit in Mo i Rana, Norway, which
reported a negative operating profit of -EUR 13 million for the first
nine months of the year. A start was made in August on restructuring
the unit's operations.

Ruukki Metals' negative operating profit was mainly due to the
continued sluggish demand for steel products and poor price
development. The low steel production capacity utilisation rate
during the early part of the year increased the costs per unit of
steel produced and had a negative impact of around EUR 190 million on
costs for January-September.

The impact of efficiency and savings measures was evident in the
company's cost structure, gaining strength towards the end of the
report period.


Third quarter operating profit

Consolidated negative operating profit for July-September was -EUR 54
million (197). Operating profit equated to -11 per cent (20 per cent
reported and 20 per cent comparable) of net sales.

Ruukki Construction's negative operating profit for July-September
was -EUR 4 million (56) and Ruukki Engineering's negative operating
profit was -EUR 7 million (34).

Ruukki Metals' negative operating profit was -EUR 39 million (112),
which was a notable improvement on the first and second quarters. The
cost impact of the low steel production capacity utilisation rate
fell to around -EUR 30 million during the third quarter compared to
the first and second quarters (Q1/2009: -EUR 90 million and Q2/2009:
-EUR 70 million). The fall in the price of coal and iron ore - the
main raw materials used in steel production - also lowered costs per
unit of steel produced. The full impact of this fall in prices began
to be reflected in the company's cost structure towards the end of
the third quarter onwards.


Financial items and earnings for January-September

Net finance expense and exchange rate differences relating to finance
totalled EUR 29 million (6), including an arrangement fee of around
EUR 5 million, paid in June, for a new revolving credit facility. Net
interest costs totalled EUR 19 million (8).

Group taxes were -EUR 84 million (134), which includes an increase of
EUR 80 million (7) in deferred tax assets.

Earnings for the period were -EUR 229 million (368).

Earnings per share were -EUR 1.65 (2.65).


Balance sheet, cash flow and financing

The balance sheet total at 30 September 2009 was EUR 2,497 million
(2,987). Equity was EUR 1,553 million (1 997) equating to EUR 11.18
per share (14.39). The decrease in equity during the report period
was mainly attributable to the consolidated loss and to dividends
paid. The equity ratio at the end of September was 62.7 per cent
(68.0).

Return on equity during the last 12 months was -10.8 per cent (23.0)
and return on capital employed was -10.0 per cent (29.6).

Acquisitions during January-September resulted in an increase of EUR
9 million in property, plant and equipment and an increase of EUR 4
million in goodwill to EUR 104 million.

Cash flow from operating activities was EUR 69 million (284) and cash
flow before financing activities was -EUR 48 million (142). EUR 222
million was released from net working capital during the report
period.

Net interest-bearing financial liabilities at 30 September 2009 were
EUR 410 million (155), up by EUR 256 million since the 31 December
2008. This increase is mainly due to dividends paid during the report
period. The consolidated balance sheet was healthy and the gearing
ratio was 26.4 per cent (7.8).

At the end of September 2009, the Group had liquid assets of EUR 88
million and undrawn revolving credit facilities of EUR 350 million.


Actions to improve operational efficiency and adjust operations

In October 2008, Ruukki initiated its corporate-wide Boost programme,
which aims at further operational efficiency and at permanently
improving the company's competitive edge and profitability. Boost
aims at a EUR 150 million improvement in the company's operating
profit at an annual level, compared to 2008, by the end of 2011.

The company continued work on actions implemented under the Boost
programme during the report period. Permanent cost savings achieved
during January-September amounted to around EUR 46 million and the
cost savings delivered by the programme are estimated to exceed EUR
60 million in 2009. Actions already initiated equate to cost savings
of around EUR 80 million at an annual level.

In the context of the programme, Ruukki Construction has implemented
a number of production arrangements between sites during the year.
Efficiency has been improved by centralising production, which has
resulted in the closure of production sites in, for example, Latvia,
Lithuania and the Czech Republic. An efficiency programme was
completed at Oborniki, Poland during the third quarter and a
corresponding programme is progressing to plan at Obninsk, Russia.

Ruukki Engineering has improved operational efficiency by
transferring production lines and by adjusting production. In May,
plans were announced to discontinue the manufacture of components at
the Hässleholm and Oskarström sites in Sweden. Through these actions,
the company seeks to centralise operations and strengthen its
engineering competences in future growth areas, particularly in
Central Eastern Europe and China. The Swedish units above will be
closed by the end of the year.

In July, it was announced that operations at the Mo i Rana plant in
Norway were to be reorganised because of poor demand in the
shipbuilding industry. In future, the Mo i Rana plant will focus on
the production of flange profiles for windmill towers.

Ruukki Metals' efficiency measures include centralising parts
processing on its service centres in Raahe and Seinäjoki, and in this
context closure of the steel service centre in Tampere in Finland.

In addition to the Boost programme, adjustment measures are also
under way across the company as a result of difficult market
conditions. By the end of September, employer-employee negotiations
relating to actions to improve efficiency and to adjust operations
had resulted in a corporate-wide workforce reduction of around 1,900
employees. Around 500 of the employees affected are in Finland. At
the end of September, a total of some 1,450 employees (4,800 at the
end of June) were subject to temporary lay-off measures. Around 1,150
of these employees are in Finland. In addition, around 480 people in
Central Eastern Europe are working a four-day week until further
notice. It is estimated that adjustment measures initiated will
deliver cost savings of around EUR 30 million in 2009.


Personnel

The Group employed an average of 12,914 (15,086) persons during
January-September. At the end of September, the headcount was 12,204
(14,956), which was spread as follows: 6,173 in Finland, 1,123 in the
other Nordic countries, 2,283 in Central Eastern Europe, 2,274 in
Russia and other CIS countries, 77 in Western Europe and 274 in other
countries.

Positive progress has been made with lost-time accident frequency,
which during the first nine months of the year was 8 (12) per million
hours worked.


Capital expenditure

Net cash flow from investing activities during January-September was
-EUR 117 million (-142).

Capital expenditure on tangible and intangible assets during the
report period totalled EUR 121 million (158), of which maintenance
investments accounted for EUR 52 million (45). A total of EUR 7
million (6) was spent on acquisitions. Other shares increased by EUR
2 million (1). Cash inflows of EUR 13 million (21) from investing
activities during the report period were mostly generated by
divestments of property, plant and equipment.

Depreciation of fixed assets during the report period was EUR 108
million (109).

A decision was made in April to modernise the two blast furnaces at
the Raahe Works during 2010 and 2011. Modernisation of blast furnace
1 is planned to begin in April 2010. The company plans to modernise
blast furnace 2 during 2011. Modernisation of the blast furnaces is a
necessary maintenance investment. Both blast furnaces will be shut
down in turn for around two months during modernisation. It is
expected to take between four and six weeks after start-up for the
blast furnaces to return to normal production levels.

In connection with blast furnace modernisation, the company will
switch over to using only iron pellets instead of sinter as a raw
material in the iron-making process. The sinter plant currently in
use will be closed down by the end of 2011.

The investments planned for 2009-2012 to modernise the blast furnaces
and change the feedstock base total around EUR 220 million, in
addition to which environmental investments of some EUR 60 million
will be made. Some EUR 55 million of the investments are expected to
be scheduled for 2009, EUR 107 million for 2010, EUR 109 million for
2011 and the remaining EUR 10 million for 2012.

Consolidated capital expenditure on tangible and intangible assets
during 2009 is estimated to remain below EUR 170 million.


Shares and share capital

During the first nine months of 2009, Rautaruukki Oyj shares (RTRKS)
were traded for a total of EUR 2,203 million (4,639) on NASDAQ OMX
Helsinki. The highest price quoted was EUR 18.14 in September and the
lowest was EUR 11.06 in January. The volume weighted average price
was EUR 14.47. At the end of the report period on 30 September 2009,
the share closed at EUR 16.40 and the company had a market
capitalisation of EUR 2,301 million (1,952).

The company's registered share capital at 30 September 2009 was EUR
238.5 million and there were 140,285,425 shares issued.

The Board of Directors has the authority to acquire a maximum of
12,000,000 of the company's own shares. The authority is valid for 18
months from the date of the resolution of the Annual General Meeting
held on 24 March 2009. During the report period, The Board of
Directors did not exercise its authority to acquire the company's own
shares.

In addition, the Board of Directors has the authority to decide on a
share issue, which includes the right to issue new shares or to
transfer treasury shares held by the company. The authority applies
to a maximum of 15,000,000 shares in total. The Board of Directors
has the right to disapply the pre-emption rights of existing
shareholders in a private placement. The authority also includes the
right to decide on a bonus issue. The authority is valid until the
close of the 2011 Annual General Meeting. During the report period,
the Board of Directors did not exercise its authority to issue
shares.

At the end of the report period, the Board of Directors had no valid
authority to issue options or other special rights providing
entitlement to shares.

At 30 September 2009, the company held 1,420,608 treasury shares,
which had a market value of EUR 23.3 million and an accountable par
value of EUR 2.4 million. Treasury shares account for 1.01 per cent
of the total number of shares and votes.


Energy and the environment

In July, the World Steel Association awarded Ruukki a Climate Action
certificate for 2009-2010 for fulfilling its commitment to take part
in the worldsteel Climate Action recognition programme against
climate change.

In September, Ruukki was chosen for inclusion in the Dow Jones
Sustainability World (DJSI World) -index for the second year running
and in the Dow Jones STOXX Sustainability (DJSI STOXX) index for the
third year running. These indexes include the top companies in their
field that are committed to sustainable development. Ruukki ranks
among the world's seven best steel companies on the DJSI World list.


Events taking place after 30 September 2009

In October, an announcement was made of a contract for the
manufacture and installation of steel structures and roofing elements
for a new multi-purpose stadium to be built in Stockholm, Sweden. The
order is worth a total of about EUR 20 million. Ruukki's deliveries
will begin in June 2010 and are estimated to continue until August
2011.The new stadium is scheduled for completion in 2012.

In October, it was announced that the operational efficiency of
Ruukki Metals' steel service centres in Finland is to be improved. It
is estimated that the actions to improve efficiency will result in a
need to reduce the workforce by a total of around 175 persons. In
addition, due to weak market conditions, employer-employee
negotiations are to be initiated regarding possible temporary layoffs
in plate and prefabricated steel product operations in Raahe and at
three service centres. A total of around 670 people are affected by
the negotiations.


Risks and risk management

Risk management at Rautaruukki is guided by the operating principles
and process of corporate risk management set out in the risk
management policy approved by the company's Board of Directors. Risk
management is an integrated part of the company's management system.
The company has detailed the business risks and risk management in
the Annual Report 2008 and does not consider any material changes to
have taken place during the report period in the risks and factors of
uncertainty presented in the Annual Report 2008.


Near-term outlook

There were no significant changes in the company's market outlook
during the third quarter. It still remains difficult to forecast
demand and business predictability is thus lower than usual.

Residential construction in Finland and the other Nordic countries is
estimated to be comparatively brisk compared to other construction
sectors, even though seasonal demand slows towards the year-end. No
growth in activity in commercial and industrial construction is
anticipated during the current year. Demand in this sector is not
predicted to recover until customer confidence and a willingness and
ability to invest are restored. If the price of oil remains at its
present level or even rises, this might to some extent boost
commercial and industrial construction in Russia during the fourth
quarter. Thanks to public sector stimulus packages, infrastructure
construction in the Nordic countries is expected to pick up somewhat
from late 2009 onwards.

Customers' order intake in the engineering industry has been modest.
Consequently, no noticeable improvement in deliveries, from the poor
level experienced so far this year, is predicted for the rest of 2009
to equipment manufacturers in the lifting, handling and
transportation sector. Demand from equipment manufacturers in the
energy industry is expected to continue good compared to other
customer groups, even though difficulties in securing funding might
delay decisions relating to new wind farm projects. There have been
very few new orders in the shipbuilding industry throughout the year.

The World Steel Association forecasts a contraction worldwide of
around 9 per cent in apparent steel use in 2009 compared to 2008 and
a decline of around 33 per cent in apparent steel use in the EU-27
region. Because stock levels in relation to sales are now almost
normal, deliveries from steelmakers are expected to gradually pick up
to correspond to steel use. Sales volume development for plate
products is expected to remain much weaker than that for strip
products. Sales price development has levelled off and prices in some
product groups are showing a slight rise during the fourth quarter.

The fall in prices of the raw materials used in steel production will
be reflected in full in the company's cost structure during the
fourth quarter. The steel production capacity utilisation rate will
remain unchanged on that for the third quarter. This will increase
operational efficiency and, compared to the first half of the year,
considerably reduce the costs per unit of steel produced.

The company estimates its operational excellence programme Boost and
adjustment measures already initiated to deliver cost savings of more
than EUR 90 million for the year as a whole. Efficiency actions and
adjustment measures will continue corporate-wide. The company's
financial position is expected to remain strong.

The company estimates there will be a marked improvement in the
result before taxes for the fourth quarter, compared to the third
quarter, but that the result might remain slightly negative.


This report is unaudited.

Helsinki, 22 October 2009

Rautaruukki Corporation

Board of Directors


DIVISIONS

Ruukki Construction


EUR million         Q1/08 Q2/08 Q3/08 Q4/08  2008 Q1/09 Q2/09 Q3/09
Net sales             225   285   309   248 1 067   132   145   164
Operating profit *     21    38    56    17   132   -13    -9    -4
as % of net sales *     9    13    18     7    12   -10    -6    -3
* Excluding non-recurring items.



Net sales

Ruukki Construction's net sales for the first nine months of the year
were EUR 442 million (818), down by 46 per cent year on year. The
division accounted for 31 per cent (27) of consolidated net sales.
Third quarter net sales were down year on year at EUR 164 million
(309).

Net sales development was affected by continued weak demand
throughout the report period, with particularly low business activity
in commercial and industrial construction. There was continued
caution in investment decisions and noticeably fewer construction
projects were started than in previous years. The start of many
projects has been delayed in a number of market areas and, in some
countries in Central Eastern Europe, Russia and Ukraine, projects
were even discontinued. In Russia, and partly also in other market
areas, publicly funded projects, such as the construction of sports
facilities and agricultural buildings, accounted for a considerably
increased share of the division's net sales. In Russia, deliveries
for construction projects in the energy industry continued to be
brisker than for those in other industrial sectors and, towards the
end of the third quarter, demand within private self-financed
projects picked up slightly.

Infrastructure construction net sales were down for the first nine
months of 2009, but the decline was less than for net sales of
commercial and industrial construction. There was a good level of
activity in road and rail projects in the Nordic countries, although
continued low demand for piles used in building foundation
construction reduced net sales. Infrastructure construction accounted
for 14 per cent (11) of the division's net sales during the report
period.

Seasonal demand for residential roofing products was reasonably good
and third quarter sales were brisker than during the first part of
the year, even though market conditions were noticeably weaker than
in earlier years. Residential roofing products accounted for 19 per
cent (15) of the division's net sales during the first nine months of
the year.


Operating profit

Ruukki Construction's negative operating profit was -EUR 26 million
(115) for the first nine months of the year and -EUR 4 million (56)
for the third quarter. Operating profit fell as a result of lower
sales volumes coupled with lower selling prices. Selling prices fell
in all market areas as a result of lower steel material prices and
tougher competition. However, the fall in prices levelled off during
the course of the third quarter.

The use of own steel material produced at high raw material prices,
together with the use of high-cost external material in stock,
weakened profitability, particularly during the first half of the
year. Lower raw material costs impacted on operating profit partly
during the third quarter and the impact will be reflected in full
during the fourth quarter.


Major orders

A number of major orders were announced during the third quarter. In
July, Ruukki signed a partnership agreement for the delivery of
structures for a new theatre and concert hall being built in
Kristiansand, Norway. Ruukki is responsible for the workshop design
and delivery, including installation, of the frame structures. The
contract is worth around EUR 2.5 million.

August saw the announcement of a sandwich panel delivery for a new
confectionery factory being built in southern Poland. Delivery
includes panel manufacture and installation, as well as project
management. Also in August, a delivery of structures for a customer's
new production facilities in Poland was announced. Delivery includes
the production and installation of steel structures for three
separate buildings.

September saw the announcement of a delivery for a home furnishing
store being built in Tampere, Finland. Ruukki's delivery includes
frame design, manufacture and installation, as well as panel
deliveries and design of the cladding elements. The order is worth
around EUR 2 million. In addition, the company announced that it had
been chosen to be the steel structure contractor for production
premises to be built near Bergen, Norway. Ruukki's delivery includes
frame structure design, manufacture and installation. The order is
worth almost EUR 4 million.

Also in September, the company agreed an extensive delivery entity
for a transport infrastructure project in Fredrikstad, Norway.
Ruukki's delivery includes steel structures, including installation,
for Krakeroy bascule bridge and steel piles for the bridge
foundations. The order is worth a total of almost EUR 5 million.

In October, after the report period, an announcement was made of a
contract for the manufacture and installation of steel structures and
roofing elements for a new multi-purpose stadium to be built in
Stockholm, Sweden. The order is worth a total of about EUR 20
million. Ruukki's deliveries will begin in June 2010 and are
estimated to continue until August 2011. The new stadium is scheduled
for completion in 2012.


Capital expenditure

Construction of the sandwich panel line being built in Ukraine under
an investment programme to increase production capacity in Russia and
Eastern Europe is still incomplete. In the light of market
conditions, the installation and start-up of the line have been
pushed back and it is planned to complete the investment during
spring 2010. The new panel plant investment under construction in
Obninsk, Russia has been discontinued until further notice.

Construction of the new sandwich panel plant at Alajärvi, Finland had
progressed to pilot use during the third quarter. The plant will be
completed during the fourth quarter and thanks to its high degree of
automation will improve the division's cost competitiveness. The
lines at the new plant will also improve Ruukki's ability to
manufacture panels that comply with tougher energy regulations
entering into force at the start of 2010.


Improved operational efficiency

Under the corporate-wide operational excellence programme, Boost, the
division actioned a number of production arrangements between sites
during the first part of the year. Efficiency has been improved by
centralising production, which has resulted in the closure of
production sites in Latvia, Lithuania and the Czech Republic. An
efficiency programme was completed at Oborniki, Poland during the
third quarter and a corresponding programme is progressing to plan at
Obninsk, Russia.


Ruukki Engineering


EUR million         Q1/08 Q2/08 Q3/08 Q4/08 2008 Q1/09 Q2/09 Q3/09
Net sales             188   205   184   187  765   125    75    63
Operating profit *     32    35    34    27  128     5    -2    -7
as % of net sales *    17    17    19    14   17     4    -3   -12
* Excluding non-recurring items.



Net sales

Ruukki Engineering's net sales for the first nine months of the year
were EUR 263 million (578), down by 55 per cent year on year. The
division accounted for 18 per cent (19) of consolidated net sales.
Third quarter net sales were down considerably year on year at EUR 63
million (184).

Ruukki Engineering's delivery volumes fell sharply. End-customer
demand remained particularly low and, together with de-stocking,
decreased order intake. Net sales during the report period contracted
in all customer segments compared to a year earlier. The sharpest
fall in net sales was in the lifting, handling and transportation
equipment segment. Delivery volumes to shipbuilding and offshore
customers were also low. On the contrary, deliveries to equipment
manufacturers in the energy industry, both in wind and diesel power
plants, continued at a good level compared to other customer groups.

Selling prices were also down. A large proportion of the division's
annual contracts expired during the summer and prices under the new
contracts were lower than for the previous term of contract. This in
turn weakened net sales during the third quarter.

Manufacturers of lifting, handling and transportation equipment
accounted for 36 per cent (43) of the division's net sales for the
first nine months of the year and equipment manufacturers in the
energy industry for 36 per cent (19).


Operating profit

Ruukki Engineering's reported operating profit contracted to -EUR 9
million (101) for the first nine months of the year and negative
operating profit excluding non-recurring items was -EUR 4 million.
The division posted a third quarter negative operating profit of -EUR
7 million (34).

Operating profit during the report period was weakened by lower
delivery volumes, lower selling prices - especially for plate
products - as well as by the use, during the first half of the year,
of steel material made at high raw material prices. Due to weak
demand in the shipbuilding industry, profitability has been
particularly poor in the company's unit in Mo i Rana, Norway, which
reported a negative operating profit of -EUR 13 million for the first
nine months of the year. In July, the company decided to reorganise
operations at Mo i Rana and in future, the plant will focus on the
production of flange profiles for windmill towers.


Capital expenditure and business development

Ruukki Engineering has systematically invested in new technology to
improve production efficiency, quality and delivery accuracy. The
third quarter saw the completion of installation of two robot cells
at the cabin assembly unit in Kurikka, Finland and of the project to
automate welding operations at the Peräseinäjoki site in Finland. A
machining investment at Jaszbereny in Hungary is progressing to plan.

Ruukki Engineering has received multi-site certification, which
encompasses ISO 9001:2000 quality management certification, ISO
14001:2004 environmental management certification and ISO 3834-2
quality requirements for fusion welding of metallic materials.
Multi-site certification covers all Ruukki Engineering's management
systems and processes at both unit and divisional level.


Improved operational efficiency

In May, the company announced it was to discontinue the manufacturing
of components at the Hässleholm and Oskarstöm units in Sweden. These
actions are intended to centralise the company's operations and to
strengthen its engineering competences in future growth areas,
particularly in Central Eastern Europe and China. The plan is to
close the above Swedish units by the end of the year.

In July, the company decided to reorganise operations at its plant in
Mo i Rana, Norway due to weak demand in the shipbuilding industry.
Adjustment to production will result in the reduction of an estimated
137 jobs, which will take place later this year.

In September, employer-employee negotiations were initiated to
temporarily lay off employees at the Kalajoki plant in Finland, which
manufactures components for the engineering industry. The
negotiations affect a total of 108 employees at Kalajoki and a
maximum of 40 workers and 5 salaried employees are expected to be
laid off at any one time. It is planned to begin the layoffs later
this year. The extent and duration of the layoffs will become clear
as the negotiations progress.


Ruukki Metals


EUR million        Q1/08  Q2/08  Q3/08  Q4/08  2008 Q1/09 Q2/09 Q3/09
Net sales            511    571    503    412 1 997   249   218   257
Operating profit
*                     96    106    112     36   350  -102   -97   -39
as % of net sales
*                     19     19     22      9    18   -41   -44   -15
All figures are comparable and exclude Carl Froh GmbH, which was
divested.
* Excluding non-recurring items.



Net sales

Ruukki Metals' net sales for the first nine months of the year were
EUR 724 million (EUR 1,608 million reported and EUR 1,585 million
comparable). The division accounted for 51 per cent (54) of
consolidated net sales. Third quarter net sales were EUR 257 million
(503).

Delivery volumes of steel products remained exceptionally low
throughout the report period. De-stocking continued and end-customer
demand was weak. Lower customer stocks to some extent led to an
increase in order intake during the third quarter. Sales volume
development in colour-coated and galvanised strip products was
clearly better than in plate products.

Prices of steel products fell noticeably during the first half of the
year. During the third quarter, the fall in prices in a number of
product groups bottomed out as uncertainty faded about the cost of
raw materials used in steel production and in some market areas
selling prices were showing a slight rise towards the end of the
quarter.

Sales of special steel products fell more than those of other product
groups during the report period because of the continued low activity
in the main industrial sectors, such as the heavy engineering
industry, that use these products. Also sales of trading products -
stainless steel and aluminium - were down compared to a year earlier,
but picked up slightly during the third quarter. Special steel
products accounted for 19 per cent (28) of the division's net sales
during the first nine months of the year. Net sales of stainless
steel and aluminium totalled EUR 78 million (184) during the report
period.


Operating profit

Ruukki Metals' negative operating profit for the first nine months of
the year was -EUR 238 million (EUR 309 million reported and EUR 314
million comparable). Third quarter negative operating profit was -EUR
39 million (112). The division's negative operating profit was mainly
due to the continued sluggish demand for steel products and poor
price development.

The low steel production capacity utilisation rate during the early
part of the year increased the costs per unit of steel produced.
There was a notable increase in the capacity utilisation rate during
the third quarter since both blast furnaces were in operation and the
cost impact of the low utilisation rate decreased compared to
previous quarters. The cost impact was around -EUR 30 million during
Q3 (Q1/2009: -EUR 90 million and Q2/2009: -EUR 70 million). The fall
in the price of coal and iron ore - the main raw materials used in
steel production - also lowered costs per unit of steel produced. The
full impact of this fall in prices began to be reflected in the
company's cost structure towards the end of the third quarter
onwards.

Operating profit on stainless steel and aluminium was slightly
negative during the first nine months of the year.


Steel production


1000 tonnes      Q1/08 Q2/08 Q3/08 Q4/08  2008 Q1/09 Q2/09 Q3/09
Steel production   672   680   703   531 2 585   269   392   604



The company's steel production during the first nine months of the
year was 1,265 thousand tonnes (2,054).

The steel production capacity utilisation rate during the third
quarter was noticeably higher than during the first half of the year.
The blast furnace which had been idle since December 2008 at the
Raahe Works was restarted in early May and reached its target
capacity utilisation rate in mid-June, since when it has operated at
a rate of around 80-85 per cent. The idle blast furnace was restarted
especially to build up reserve stocks to safeguard uninterrupted
customer deliveries during disruption to production for the period of
downtime in 2010 whilst maintenance work is being carried out. Both
blast furnaces will be shut down in turn for around two months and it
is expected to take between four and six weeks from start-up before
they return to normal production levels.

In August, the Labour Court ruled that the June strike at the strip
mill at the Raahe Works was unlawful and ordered the local trade
union branch at the works to pay a compensatory fine for neglecting
its supervisory duty and to pay legal costs.


Capital expenditure

In April, Ruukki made a decision to modernise its two blast furnaces
at the Raahe Works during 2010 and 2011. In the same context, the
company will also make environmental investments. It is planned to
start modernisation of blast furnace 1 in April 2010. The company
plans to modernise blast furnace 2 during 2011. Blast furnace
modernisation is a necessary maintenance investment. In connection
with blast furnace modernisation, the company will switch over to
using only iron pellets instead of sinter as a raw material in the
iron-making process. The sinter plant currently in use will be closed
down by the end of 2011.

The investments planned for 2009-2012 to modernise the blast furnaces
and change the feedstock base total around EUR 220 million, in
addition to which environmental investments of some EUR 60 million
will be made.


Improved operational efficiency

Ruukki Metals' efficiency measures in Finland include centralising
parts processing on its steel service centres in Raahe and Seinäjoki,
and in this context closure of the steel service centre in Tampere,
Finland. These actions were completed during the second quarter.

During the first nine months of the year, the division has held
employer-employee negotiations to reduce the workforce and
temporarily lay off workers. By the end of September, negotiations
had resulted in a workforce reduction of around 520 persons. At the
end of the report period around 250 persons were subject to lay-offs.

In October, after the report period, it was announced that the
operational efficiency of Ruukki Metals' steel service centres in
Finland is to be improved. It is estimated that the actions to
improve efficiency will result in a need to reduce the workforce by a
total of around 175 persons. In addition, due to weak market
conditions, employer-employee negotiations are to be initiated
regarding possible temporary layoffs in plate and prefabricated steel
product operations in Raahe and at three service centres. A total of
around 670 people are affected by the negotiations.


Other events

In August, the Ministry for Economic Development and Trade of the
Russian Federation issued its draft resolution concerning the
anti-dumping of colour-coated products. According to the Ministry's
draft resolution, no legal requirements exist to impose import
duties. The final resolution will be made by the Government of the
Russian Federation, who will possibly consider the matter towards the
end of the year.  If introduced, import duties would apply to exports
of colour-coated products to Russia. The company exports around EUR
30 million of these products to Russia each year.

TABLES

This interim report has been prepared in accordance with IAS 34 and,
with the exception of the following new and amended standards
effective from 1 January 2009, is in conformity with the accounting
policies published in the 2008 financial statements.

IAS 1 Presentation of Financial Statements. The revised standard aims
to improve users' ability to analyse and compare the information
presented in the financial statements by separating changes in equity
of an entity arising from transactions with owners from other changes
in equity.

IFRS 8 Operating Segments. This new standard requires the company to
apply the "management approach" to reporting the financial
performance of its operating segments. This means that the
information disclosed must be based on the information management
uses internally to evaluate segment performance. IFRS-standards are
applied in the Group's management reporting and assessment of
performance and decisions about resource allocation to segments is
based on their respective operating profits. Adoption of the standard
has not impacted on the Group's segment structure.

IAS 23 Borrowing Costs. The amended standard requires an entity to
capitalise borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost
of that asset. The option of immediately recognising such borrowing
costs as an expense has been removed. The Group applies
capitalisation rate to calculate the interest to be capitalised. The
amended standard has had no material impact on the Group.

IFRS 2 Share-based payments amendments to the standard - Vesting
Conditions and Cancellations. The amendments clarify the accounting
treatment of vesting conditions and provide that cancellations by the
company or other parties receive similar accounting treatment.

Additionally, the Group has changed the presentation of the income
statement from the "nature of expense" method to the "function of
expense" method. The comparable figures have been restated
accordingly.

Individual figures and totals appearing in the tables have been
rounded to the nearest full million of euros.



SUMMARY CONSOLIDATED INCOME STATEMENT
EUR million                       Q1-Q3/09 Q1-Q3/08 Q3/09 Q3/08  2008
Net sales                            1 429    3 004   485   996 3 851
Cost of sales                        1 531    2 265   485   732 2 980
Gross profit                          -102      740    -1   264   872

Sales and marketing costs               82      108    24    32   148
Administrative expenses                113      135    34    41   177
Other operating income                  14       18     4     5    31
Other operating expenses                 1       10     0     0    10
Operating profit                      -284      505   -54   197   568

Finance income and expense             -29       -6   -10    -2   -23
Share of results of associates           0        3     0     1     3
Result before taxes                   -313      503   -64   195   548
Taxes                                   84     -134    19   -56  -142
Result for the period                 -229      368   -45   139   406

Attributable to:
Equity shareholders of the parent     -229      368   -45   139   406
Minority interest                        0        0     0     0    -1

Diluted earnings per share, EUR      -1.65     2.65 -0.32  1.00  2.93
Basic earnings per share, EUR        -1.65     2.65 -0.32  1.00  2.93
Operating profit as % of net
sales                                -19.9     16.8 -11.2  19.7  14.7




STATEMENT OF COMPREHENSIVE INCOME
EUR million                        Q1-Q3/09 Q1-Q3/08 Q3/09 Q3/08 2008
Result for the period                  -229      368   -45   139  406
Other comprehensive income:
Cash flow hedges                         29      -22     8   -18  -62
Translation differences                   1       -2     5    -3  -54
Actuarial gains and losses                0      -47     0     0  -62
Taxes on other comprehensive
income                                   -8       18    -2     5   32
Other comprehensive income after
taxes                                    22      -53    11   -16 -145
Total comprehensive income             -208      315   -34   123  261

Attributable to:
Equity shareholders of the parent      -208      315   -34   123  261
Minority interest                         0        0     0     0   -1




SUMMARY CONSOLIDATED BALANCE
SHEET
                                          30 Sep     30 Sep    31 Dec
EUR million                                 2009       2008      2008
ASSETS
Non-current assets                         1 479      1 444     1 442
Current assets
  Inventories                                544        747       750
  Trade and other receivables                385        745       536
  Cash and cash equivalents                   88         50       254
Total assets                               2 497      2 987     2 983

EQUITY AND LIABILITIES
Equity
  Attributable to shareholders of the
parent                                     1 553      1 997     1 948
  Minority interest                            2          2         2
Non-current liabilities
  Interest-bearing liabilities               312        132       276
  Non-interest-bearing liabilities            88        177       158
Current liabilities
  Interest-bearing liabilities               187         74       133
  Trade payables and other
liabilities                                  355        605       466
Total equity and liabilities               2 497      2 987     2 983




SUMMARY CASH FLOW STATEMENT
EUR million                                   Q1-Q3/09 Q1-Q3/08 2008
Result for the period                             -229      368  406
Adjustments                                        106      214  250
Cash flow before change in working capital        -123      583  656
Change in working capital                          222     -179 -110
Financing items and taxes                          -30     -120 -164
Cash flow from operating activities                 69      284  382
Cash inflow from investing activities               13       21   25
Cash outflow from investing activities            -131     -164 -238
Total cash flow from investing activities         -117     -142 -213
Cash flow before financing activities              -48      142  169
Dividends paid                                    -188     -277 -277
Change in interest-bearing liabilities              89      -13  193
Other net cash flow from financing activities      -21        4   -4
Translation differences                              1        0  -11
Change in cash and cash equivalents               -166      145   70




KEY FIGURES
                                         Q1-Q3/09    Q1-Q3/08    2008
Net sales, EUR m                            1 429       3 004   3 851
Operating profit, EUR m                      -284         505     568
as % of net sales                           -19.9        16.8    14.7
Result before taxes, EUR m                   -313         503     548
as % on net sales                           -21.9        16.7    14.2
Result for the period, EUR m                 -229         368     406
as % of net sales                           -16.0        12.3    10.5
Return on capital employed (rolling
12 mths), %                                 -10.0        29.6    25.6
Return on equity, %                         -10.8        23.0    20.7
Equity ratio, %                              62.7        68.0    65.9
Gearing ratio, %                             26.4         7.8     7.9
Net interest-bearing liabilities, EUR
m                                             410         155     155
Equity per share, EUR                       11.18       14.39   14.04
Personnel, average                         12 914      15 086  14 953
                                                              140 255
Number of shares                      140 285 425 140 215 328     479
                                                              138 788
 - excluding treasury shares          138 864 817 138 748 391     542
                                                              138 773
 - diluted, average                   138 839 756 138 788 490     118




STATEMENT OF CHANGES IN EQUITY
                 Equity attributable to shareholders of
                                 parent
                                Fair
                               value
                                 and  Trans-           Re-   Min-
                               other  lation  Trea- tained  ority
                Share   Share    re-   diff-   sury  earn- inter-  Total
EUR million   capital premium serves erences shares   ings   ests equity
EQUITY 1 Jan
2008              238     220      0      -6     -6  1 513      3  1 963
Share issue         0                                                  0
Dividend
distribution                                          -277          -277
Share-based
payments                           0              0      0             0
Total
comprehensive
income                             0      -2      0    317      0    315
EQUITY 30 Sep
2008              238     220      0      -8     -6  1 553      2  1 999

EQUITY 1 Jan
2009              238     220      0     -36     -6  1 532      2  1 950
Share issue         0                                                  0
Dividend
distribution                                          -188          -188
Share-based
payments                           0              0      0             0
Total
comprehensive
income                                     1          -208      0   -208
EQUITY 30 Sep
2009              238     220      1     -36     -6  1 136      2  1 554




NET SALES BY REGION
As % of net sales                          Q1-Q3/09 Q1-Q3/08 2008
Finland                                          31       32   31
Other Nordic countries                           31       32   31
Central Eastern Europe, Russia and Ukraine       19       19   20
Rest of Europe                                   13       13   15
Other countries                                   5        3    3




CONTINGENT LIABILITIES
EUR million                          Q1-Q3/09 Q1-Q3/08 2008
Mortgaged real estate                      73       24   24
Pledged assets                              0        6    5
Other guarantees given                     40       38   45
Collateral given on behalf of others        2        6    2
Rental liabilities                        110      142  132




VALUES OF DERIVATIVE
CONTRACTS
CASH FLOW HEDGES QUALIFYING FOR HEDGE ACCOUNTING
                                                               30 Sep
                            30 Sep 2009     30 Sep 30 Sep 2008   2008
                                Nominal       2009     Nominal   Fair
EUR million