Ruukki's Capital Markets Day - strategic focus ...

Rautaruukki Corporation Stock exchange release 22 November 2012 at 12.00 EET

At Rautaruukki's Capital Markets Day hosted in Helsinki today, the company's management will present their review of the sector and shed light particularly on business opportunities in Russia. With the Fortaco arrangement, Ruukki will in future focus on the construction and special steels businesses. The focus of growth in construction is Russia and the roofing business.

There have been no significant changes in global economic outlook since Ruukki's interim report for the third quarter. At Ruukki, economic uncertainty has been reflected especially in the fall in investment-decision-driven demand. However, in many of Ruukki's important market areas, such as Russia and the Nordic countries, economic growth is expected to remain relatively stronger than in many other European countries.

In October, Ruukki and funds managed by CapMan agreed to combine units of Komas and units of Ruukki Engineering division to form a new company known as Fortaco. The agreement is still subject to approval from the competition authorities, which is expected to be finalised before the end of the year. The formation of Fortaco means that Ruukki's strategic direction is now more focused than before. Ruukki's focus in its construction business is growth in Russia and in residential roofing products. The focus in the steel business is on special steels.

Ruukki's construction business has a strong market position in the Nordic countries and the Baltic states, as well as good growth potential in Central Eastern Europe and Russia. Growth is expected especially in residential roofing products and the Russian market. Demand for Ruukki's residential roofing products is consumer driven and based mostly on renovation construction, the demand for which is significantly less dependent on economic business cycles than new construction is. The outlook for residential construction in Ruukki's most important markets is relatively good. Ruukki is able to provide total roofing solutions, including rainwater and safety systems. Ruukki's strengths in roofing products also include a strong brand and product portfolio, and an own distribution network. In Russia, the location of Ruukki's production facilities in the immediate proximity of the Moscow expansion area is a major advantage. The plan is to further develop distribution and service concepts. Good business opportunities are also seen in energy-efficient construction, especially in northern Europe.

Ruukki's steel business will focus on increasing the share of special steels of net sales. Strengthening our own international distribution and service network and our network of certified partners as well as growing our portfolio of special steels are key in the special steels business. Demand growth for special steels is faster than for standard steels in both the emerging and developed markets. The profitability of special steels is also better than that of standard steels. In the Nordic countries and Baltic states, the aim is to further strengthen the company's good market position. This is where steel service centres and prompt service have a key role. The near-term outlook in the steel business remains uncertain and it is difficult to forecast demand development.

Efficiency projects under way in Ruukki's steel and construction businesses have progressed and the savings target of EUR 100 million is currently expected to be achieved. Around EUR 20 million of the cost benefit from efficiency projects is expected to be achieved during the current year. The annualised savings linked to the actions currently in progress are about EUR 55 million.

Compared to the previous quarter, new price contracts for raw materials are expected to reflect lower raw materials costs of around EUR 24 million in the fourth quarter.

During the current year, cash flow has been clearly better than the previous year. Funds from working capital are typically freed up from working capital during the fourth quarter. This means cash flow for the entire year is estimated to clearly improve compared to the previous year.

Capital Markets Day material:
Capital Markets Day material is available in English from around 12.00 on 22 November 2012 on the company's website at www.ruukki.com/Investors, where the CMD programme can be followed as a live webcast starting at 1pm EET.

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

Rautaruukki Corporation
Taina Kyllönen
SVP, Marketing and Communications

Ruukki provides its customers with energy-efficient steel solutions for better living, working and moving. Ruukki operates in some 30 countries and employs around 11,800 people. Net sales in 2011 totalled EUR 2.8 billion. The company's share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS).

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

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Source: Rautaruukki Oyj via Thomson Reuters ONE

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