Rautaruukki Corporation's Interim report for Ja...
Rautaruukki Corporation Interim report 22 October 2008 at 9:00
Summary of results for first nine months of 2008 (reference period
Q1-Q3/2007)
- Net sales EUR 3,004 million (2,895), comparable EUR 2,981 million
(2,784)
- Operating profit EUR 505 million (518), comparable EUR 511 million
(516)
- Return on capital employed 29.6 per cent (33.2**)
- Earnings per share (diluted) EUR 2.65 (2.74)
- Comparable consolidated net sales growth during the current year is
expected to remain somewhat below the 10 per cent target announced
earlier.
- Operating profit in 2008 is expected to be higher than in 2007.
+-------------------------------------------------------------------+
| KEY FIGURES | Q1-Q3/08 | Q1-Q3/07 | Q3/2008 | Q3/2007 | 2007 |
| | | | | | |
|-----------------+----------+----------+---------+---------+-------|
| Net sales, EUR | 3 004 | 2 895 | 996 | 935 | 3 876 |
| m | | | | | |
|-----------------+----------+----------+---------+---------+-------|
| Net sales, EUR | | | | | |
| m, comparable | 2 981 | 2 784 | 996 | 899 | 3 744 |
|-----------------+----------+----------+---------+---------+-------|
| Operating | | | | | |
| profit, EUR m | 505 | 518 | 197 | 162 | 637 |
|-----------------+----------+----------+---------+---------+-------|
| Operating | | | | | |
| profit, EUR m | | | | | |
| comparable | 511 | 516 | 197 | 162 | 635 |
|-----------------+----------+----------+---------+---------+-------|
| Operating | | | | | |
| profit as % of | | | | | |
| net sales | 16.8 | 17.9 | 19.7 | 17.3 | 16.4 |
|-----------------+----------+----------+---------+---------+-------|
| Operating | | | | | |
| profit as % of | | | | | |
| net sales, | | | | | |
| comparable | 17.1 | 18.5 | 19.7 | 18.0 | 17.0 |
|-----------------+----------+----------+---------+---------+-------|
| Profit before | 503 | 512 | 195 | 159 | 621 |
| taxes, EUR m | | | | | |
|-----------------+----------+----------+---------+---------+-------|
| Profit before | | | | | |
| taxes, EUR m, | 508 | 510 | 195 | 162 | 619 |
| comparable | | | | | |
|-----------------+----------+----------+---------+---------+-------|
| Earnings per | | | | | |
| share, diluted, | | | | | |
| EUR | 2.65 | 2.74 | 1.00 | 0.85 | 3.31 |
|-----------------+----------+----------+---------+---------+-------|
| Return on | | | | | |
| capital | | | | | |
| employed, % * | 29.6 | 33.2** | | | 29.8 |
|-----------------+----------+----------+---------+---------+-------|
| Gearing ratio, | | | | | 1.4 |
| % | 7.8 | 10.1 | | | |
|-----------------+----------+----------+---------+---------+-------|
| Personnel, | | | 15 285 | 15 056 | 14 |
| average * | 15 086 | 14 225 | | | 326 |
+-------------------------------------------------------------------+
The comparable figures exclude the business operations of Ruukki
Betonstahl GmbH, Ruukki Welbond BV and Carl Froh GmbH, which have
been divested.
* Based on previous 12 months and reference periods restated in
accordance with the new accounting principle.
** The comparable figure excludes a capital gain of EUR 100 million
on the divestment of Ovako.
First nine months of 2008 in brief:
Comparable consolidated net sales for the first nine months of 2008
grew by 7 per cent to EUR 2,981 million (2,784). Comparable operating
profit was EUR 511 million (516), equating to 17.1 per cent (18.5) of
net sales. Comparable operating profit for the third quarter improved
year on year to EUR 197 million (EUR 162 million Q3/2007).
- The solutions businesses - Ruukki Construction and Ruukki
Engineering - increased their share of consolidated net sales to 46
per cent (43) during the report period.
- Ruukki Construction's net sales rose on the back of strengthened
demand for non-residential construction, higher sales prices and, due
to new capacity, increased frame and project business in Russia,
Romania and Poland. Demand and sales volumes within infrastructure
construction continued at a good level. A slow down in residential
construction reduced sales of roofing components in the Baltics.
- The market situation was favourable in Ruukki Engineering's
customer industries, especially in the energy industry. Sales volumes
within the lifting, handling and transportation equipment industry
also grew year on year.
- Good demand for steel products. Special products continued to
account for a growing share, 28 per cent (23) of Ruukki Metals' net
sales.
President & CEO Sakari Tamminen comments on the results for the first
nine months of 2008:
- The uncertainty in the global economy had no major affect on our
customer industries during the report period. Except in residential
construction, where the market slowed particularly in the Baltics,
demand was good in our main customer industries and core market
areas. In the Nordic countries, the focus has shifted from new to
renovation construction. Uncertainty has increased in the
non-residential construction markets as the year goes on.
In the engineering industry, the order books and demand of customers
in the lifting, handling and transportation equipment industry
remained good, likewise in the wind power and shipbuilding
industries. There was continued good demand also for steel products.
During the current year, we have enhanced our operations by
restructuring production and centralising operations. Actions to
further improve profitability, increased sales volumes and higher
sales prices improved our operating profit during the report period.
An extensive investment programme to increase non-residential
construction delivery capability in Central Eastern Europe is on
track to completion and is already partly being reflected in a growth
in Ruukki Construction's net sales, although the costs of building
the organisation and sales network in association with the programme
still affected the division's earnings performance.
The company's organic growth was as expected during the report
period. However, general economic uncertainty is expected to slow the
company's growth outlook for the rest of the year in galvanised
products delivered to the automotive industry. Net sales growth is
also affected by stainless steel trading prices, which are lower than
in 2007. We expect comparable consolidated net sales growth during
the current year to remain somewhat below the 10 per cent target
announced earlier. Operating profit in 2008 is expected to be higher
than in 2007.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Sakari Tamminen, President & CEO, tel. +358 20 592 9075
Mikko Hietanen, CFO, tel. +358 20 592 9030
Press conference: Rautaruukki will hold a press conference for
analysts and the media on 22 October 2008 at 10.30 at Ruukki,
Suolakivenkatu 1, 00810 Helsinki.
Webcast and conference call: The English webcast and conference call
for investors and analysts can be viewed live on the company's
website at www.ruukki.com/investors, today 22 October 2008 at 14.00
Finnish time. A replay of the webcast can be viewed on the same site
from about 18.00 Finnish time. To attend the conference call, please
call +44 (0)20 7162 0025, password: Rautaruukki, about 5-10 minutes
before the conference starts. A recording of the conference call can
be heard until 25 October 2008 on +44 (0)20 7031 4064, access code:
813344
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 15,000 people. Net sales in
2007 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
RAUTARUUKKI CORPORATION'S INTERIM REPORT FOR JANUARY-SEPTEMBER 2008
The market situation in Rautaruukki's core markets and main customer
industries was good throughout the report period.
Demand for non-residential construction was at a good level across
the market area during the third quarter. There was also continued
good demand for infrastructure construction. The residential
construction market slowed, especially in the Baltics.
The order books of engineering customers continued to show strength
and this was reflected in good demand also during the third quarter.
Demand continued to grow especially in the lifting, handling and
transportation equipment industry and in the energy industry.
Overall demand for steel products was still at a good level, with
further growth in demand especially for special steel and plate
products during the third quarter.
Net sales during January-September
Unless otherwise stated, the comparable figures in brackets refer to
the same period a year earlier.
The company reported net sales of EUR 3,004 million for the first
nine months of 2008, up by EUR 109 million compared to last year (2
895). Comparable net sales for the first nine months of the year were
EUR 2,981 million, up by EUR 197 million or 7 per cent on the
comparable figure of EUR 2,784 million a year earlier. The comparable
figures exclude Ruukki Betonstahl GmbH and Ruukki Welbond BV, which
were part of the Group until November 2007, and Carl Froh GmbH, which
was part of the Group until June 2008. Acquisitions had no
significant impact on consolidated net sales growth during the report
period.
Ruukki Construction's net sales during January-September rose to EUR
818 million (749) and Ruukki Engineering's net sales to EUR 578
million (487). Ruukki Metals reported net sales of EUR 1,608 million
(1 658) and comparable net sales of EUR 1,585 million (1,547).
The solutions businesses - Ruukki Construction and Ruukki Engineering
- increased their share of the company's net sales to 46 per cent
(43) during the report period. Finland accounted for 32 per cent (32)
of consolidated net sales, the other Nordic countries for 31 per cent
(30) and Central Eastern Europe, Russia and Ukraine for 21 per cent
(21). The rest of Europe accounted for 13 per cent (15) of net sales
and other countries for 3 per cent (2).
Ruukki Construction's net sales rose on the back of strengthened
demand for non-residential construction, higher sales prices and, due
to new capacity, increased frame and project business in Russia,
Romania and Poland.
Ruukki Engineering increased net sales as a result of the continuing
favourable market situation in the wind power and shipbuilding
industries, which in turn meant higher sales volumes. In addition,
net sales rose due to increased deliveries to the lifting, handling
and transportation equipment industry.
Ruukki Metals increased the share of special products of the
division's net sales to 28 per cent (23).
Net sales during the third quarter
Reported consolidated net sales during the third quarter rose to EUR
996 million (935). Comparable net sales during the third quarter were
EUR 996 million (899), up by 11 per cent year on year.
Ruukki Construction's net sales during the third quarter rose to EUR
309 million (EUR 278 million Q3/2007) due to growth in the project
business and improved sales prices.
Ruukki Engineering's net sales during the third quarter rose due to
good demand in particular for windmill components. The division's net
sales rose to EUR 184 million (EUR 157 million Q3/2007).
Ruukki Metals net sales for the third quarter rose to EUR 503 million
due to improved sales prices (the comparable figure over the same
period a year earlier was EUR 464 million).
Operating profit for January-September
The company reported operating profit of EUR 505 million (518),
equating to 17 per cent (18) of net sales for the report period.
Foreign currency hedging had a positive impact of EUR 9 million (-12)
on operating profit during the report period.
The share of the solutions businesses rose to 43 per cent (40) of
consolidated operating profit during January-September. Ruukki
Construction's operating profit was EUR 115 million (125), Ruukki
Engineering's EUR 101 million (84) and Ruukki Metals' operating
profit was EUR 309 million (329). Ruukki Metals' comparable operating
profit for January-September was EUR 314 million (327).
Ruukki Construction improved operating profit for the report period
on the back of business growth and higher sales prices. However,
operating profit was affected due to the start-up costs of an
extensive investment programme in Central Eastern Europe, building
the associated organisation and sales network, and higher steel
material costs.
Ruukki Engineering improved operating profit throughout the report
period on the back of continued strong demand, improved sales prices
and the profitability improvement programme.
Ruukki Metals improved operating profit throughout the report period
on the back of higher sales prices and an increase in the share of
special steel products of the division's sales. However, the
operating profit on stainless steel was lower than for the reference
period.
Operating profit for the third quarter
Consolidated operating profit for the third quarter rose to EUR 197
million (162) or 20 per cent of net sales. Foreign currency hedging
during the third quarter had a positive impact of EUR 29 million
(-11) on operating profit.
Ruukki Construction's operating profit for the third quarter rose to
EUR 56 million (EUR 51 million Q3/2007). Ruukki Engineering's
operating profit for July-September rose to EUR 34 million,
reflecting a year-on-year increase of 38 per cent (25). Ruukki
Metals' operating profit for the third quarter rose to EUR 112
million (96).
Financial items and profit for January-September
Net finance expense and exchange rate differences relating to
financing totalled EUR 6 million (10).
Group taxes were EUR 134 million (132), which include a decrease of
EUR 7 million (decrease of 10) in deferred tax. The Group's effective
tax rate was 27 per cent (26).
Profit for the report period was EUR 368 million (379).
Diluted earnings per share were EUR 2.65 (2.74).
Balance sheet and key indicators
The consolidated balance sheet total was EUR 152 million higher at
EUR 2,987 million than at year-end 2007 and EUR 94 million higher
than at 30 September 2007 (2,893). Equity at the end of the report
period was EUR 1,997 million (1,886).
Return on capital employed over the past 12 months was 29.6 per cent
(33.2) and return on equity was 23.0 per cent (28.1). Comparable
figures exclude the impact of the capital gain on Ovako, which was
divested in 2006.
Cash flow and financing
Cash flow from operating activities rose to EUR 284 million (244).
Cash flow after investing activities was EUR 142 million (108). The
largest change was in working capital, which rose by EUR 179 million
during the first nine months of 2008, compared with a rise of EUR 208
million during the reference period.
Net interest-bearing debt was EUR 155 million (190) at 30 September.
At year-end 2007, net interest-bearing debt was EUR 28 million.
The equity ratio was 68.0 per cent (67.1) and gearing 7.8 per cent
(10.1). At 30 September, the Group had liquid assets of EUR 50
million and undrawn revolving credit facilities totalling EUR 300
million. Shareholders' equity at 30 September was EUR 1 997 million
(1 886) or EUR 14.39 per share (13.63). In April, Rautaruukki paid
its shareholders dividends amounting to EUR 277 million.
Personnel
During the first nine months of 2008, the Group employed an average
of 15,086 (14,225) people. At 30 September, the headcount was 14,956
(14,727).
Changes in Group structure
Through M&A, property, plant and equipment increased by EUR 7 million
and goodwill by EUR 2 million during the report period.
To strengthen its position among customers within the lifting,
handling and transportation equipment industry, the company acquired,
in February, the German company Wolter Metallverarbeitung GmbH, which
makes booms for telescopic and special cranes. To expand its special
product expertise in laser and laser-hybrid welding, Rautaruukki
acquired, in April, the business operations of Finnish company
Hybri-Steel Oy. In June, Rautaruukki divested its German unit Carl
Froh GmbH, which makes precision tubes and components for the
automotive industry.
Capital expenditure
Net cash flow from investing activities was EUR 142 million (136).
Capital expenditure on tangible and intangible assets totalled EUR
158 million (113). During the report period, cash flow of EUR 21
million (16) was realised from investing activities, of which EUR 14
million (13) were derived from divestments of plant, property and
equipment and a subsidiary. EUR 6 million (40) was spent on M&A
during the report period. Capital expenditure on plant, property and
equipment during the current year is expected to exceed EUR 250
million.
Ruukki Construction has a major investment programme under way to
increase delivery capacity in Central Eastern Europe and Russia. A
decision was taken in January to invest around EUR 20 million on
building a new sandwich panel plant in Finland. In April, a decision
was taken to invest around EUR 13 million to build a steel service
centre in Russia. In addition, a total of around EUR 44 million is
being spent during the current year on gradually increasing new
finishing capacity for special steel production.
Shares and share capital
During the first nine months of 2008, Rautaruukki Oyj shares were
traded for a total of EUR 4,639 million (6,608) on NASDAQ OMX
Helsinki. The highest price quoted was EUR 34.77 in June and the
lowest was EUR 12.90 in September. The volume weighted average share
price was EUR 26.06. At 30 September 2008, the share closed at EUR
13.92 and the company had a market capitalisation value of EUR 1,952
million (5,957).
The company's registered share capital at 30 September 2008 was EUR
238.4 million and there were 140,215,328 shares issued. A total of
14,101 Rautaruukki Oyj shares were subscribed between 27 June and 16
September 2008 with warrants based on the 2003 bond loan with
warrants. The share capital was increased by EUR 23,971.70
accordingly and the increase was entered in the Trade Register on 2
October 2008.
The Board of Directors is authorised to acquire a maximum of
12,000,000 of the company's own shares. The authorisation is valid
for a period of 18 months from the resolution of the Annual General
Meeting on 2 April 2008. The Board of Directors did not exercise the
authorisation to buy own shares during the report period.
The Board of Directors is also authorised to transfer a maximum of
13,785,381 treasury shares retained by the company. The authorisation
is valid until the close of the 2009 Annual General Meeting.
At 30 September 2008, the company had 1,466,937 treasury shares,
which at that date had a market value of EUR 20.4 million and an
accountable par value of EUR 6.3 million. Treasury shares account for
a relative percentage of 1.05 per cent of the total number of shares
and votes.
Employee warrants based on the 2003 bond with warrants have been
publicly traded on NASDAQ OMX Helsinki since 24 May 2006. One warrant
entitles the holder to subscribe one share at an issue price of EUR
1.70. Warrants had been exercised to subscribe a total of 1,342,984
shares by 30 September 2008. The remaining warrants entitle holders
to subscribe a total of 57,016 shares. The subscription period
expires on 23 May 2009.
At the end of the report period, the Board of Directors has no valid
authorisations to issue convertible bonds or bonds with warrants or
to increase the company's share capital.
Environmental and energy issues
In early September, the Raahe Works in Finland received a new
environmental permit by decision of the Supreme Administrative Court.
The new permit contains stricter limits than earlier as regards
emissions to air and waterways. The new permit terms and conditions
require investments estimated at over EUR 70 million. These
investments will be completed by 2012.
On 4 September 2008, Rautaruukki was selected for inclusion in the
Dow Jones Sustainability World (DJSI World) index and, for the second
year running, in the Dow Jones STOXX Sustainability (DJSI STOXX)
index. These indexes include the top companies in their sector that
are committed to sustainable development. Ruukki ranks among the
world's six best steel companies on the DJSI World list.
Ruukki United profitability improvement programme
Ruukki United, Rautaruukki's programme to harmonise ways of working
and improve efficiency, aims to cut annual costs and permanently free
up capital, compared with 2004 levels, by the end of the current
year.
The company estimates that by the end of 2008, annual cost savings of
EUR 130 million will be achieved (target: EUR 150 million) and EUR
125 million in capital will be freed up (target: EUR 150 million).
New operational excellence programme - Boost
In October, after the report period, the company launched a
corporate-wide operational excellence programme "Boost", which aims
at operational efficiency and further improving Rautaruukki's
competitive edge and profitability. The Boost programme aims at a EUR
150 million improvement in the company's operating profit by year-end
2011, compared to the 2008 level.
Other events taking place after 30 September 2008
Rautaruukki's annual Capital Market Day for investors and analysts
was held in Vaasa, Finland in October. At the event, the company
announced it was to upgrade its EBIT margin target from 12 per cent
to 15 per cent. The company's other financial targets and dividend
policy remain unchanged. Also at the Capital Market Day, Rautaruukki
described the focus areas of business growth for the next few years:
Ruukki Construction's focus will be on the non-residential
construction market in Central Eastern Europe and CIS countries,
Ruukki Engineering will focus on OEM customers in the lifting,
handling and transportation equipment industry and in the energy
industry. Ruukki Metals will focus on special steels.
Rautaruukki announced in October that it is to improve the production
efficiency and optimise production capacity and logistics of its
Ruukki Construction division in Central Eastern Europe. These actions
aim at an annual improvement of more than EUR 3 million in Ruukki
Construction's operating profit in these units starting in 2009.
The State of Finland and Solidium Oy notified Rautaruukki Corporation
of an exemption issued by the Finnish Financial Supervision Authority
(FIN-FSA) on 21 October 2008. The decision applies to an exemption,
pursuant to Chapter 6 of the Securities Markets Act, granted to
Solidium Oy from the obligation to launch a bid to other shareholders
of Rautaruukki Corporation when the number of Rautaruukki Oyj shares
to be transferred to Solidium exceeds three tenths of the total
number of shares issued. The Finnish government has decided to
propose to the Parliament of Finland that the state's shares in eight
non-strategic listed companies are transferred as a capital
contribution to Solidium Oy, a company wholly owned by the State of
Finland. The shares to be transferred include all the 55,656,699
Rautaruukki Oyj shares, 39.69 per cent of all the shares issued,
owned by the state.
Rise in prices of steel raw materials in 2008
Prices of raw materials have risen sharply on the global market
during the current year. It is estimated the higher cost of raw
materials will add around EUR 220 million to the company's own steel
production costs in 2008 compared to 2007.
It is estimated higher raw material costs can be offset in full by
increasing sales prices and by improving cost efficiency. The size
and timing of price increases will vary according to product and
market area.
Risks and risk management
Risk management at Rautaruukki is part of an integrated management
system. The risk management policy adopted by the company's Board of
Directors sets out the principles and process of corporate risk
management. Rautaruukki has disclosed its risk management in detail
in the company's 2007 annual report.
There were no significant changes in Rautaruukki's strategic,
operative, hazard and financial risks or in risk management during
the report period.
The global credit crunch might hamper the ability of Rautaruukki's
customers to fund their business and thus affect demand for the
company's products.
Exchange rate fluctuations can have significant impact on the
company's performance. The company's largest purchasing currency is
the US dollar. The annual deficit in US dollars is estimated to be
around EUR 770 million, of which, at the end of September, some 7
months' deficit was hedged using currency derivatives. In sales, the
Group is exposed to a foreign currency risk mainly in Swedish,
Norwegian and Danish crowns, the pound sterling, Russian rouble,
Polish zloty and Baltic currencies.
Outlook for the rest of the year
Demand is expected to continue mostly good in Rautaruukki's key
customer industries. The credit crunch, which has spread from the
United States, might hamper the ability of Rautaruukki's customers to
fund their business and thus affect demand for the company's
products. However, the company believes the possible impact of the
credit crunch will be less in its core market areas - the Nordic
countries, Central Eastern Europe, Russia and Ukraine - than in
Western Europe.
Demand for non-residential construction has remained good, despite
increased uncertainty in the market. The construction markets in
Central Eastern Europe and Russia are expected to show further
growth. Good demand is expected to continue in infrastructure
construction. Residential construction activity in the Baltics and in
the Nordic countries is expected to slow down.
Continued good demand for the company's products is expected from
engineering industry customers. Order books of customers in the
lifting, handling and transportation equipment industry are strong
and demand is expected to remain at a good level. Continued strong
demand is expected in the energy industry - especially within the
wind power sector - and in the shipbuilding industry.
Demand for steel products is expected to continue mostly good. Demand
for plate and special steel products for the engineering industry is
still showing growth. Increasing uncertainty in demand within the
automotive industry is expected to be reflected in sales of
galvanised products. Net sales of stainless steel are expected to be
below the 2007 level.
Comparable consolidated net sales growth during the current year is
expected to remain somewhat below the 10 per cent target announced
earlier. Operating profit in 2008 is expected to be higher than in
2007.
This report is unaudited.
Helsinki, 22 October 2008
Rautaruukki Corporation
Board of Directors
DIVISIONS
Since the beginning of 2008, the accounting principle for segment
information has been revised as follows: Ruukki Metals division is
responsible for the costs or income arising when steel production
diverges from normal capacity utilisation. The comparable segment
information for 2007 has been adjusted to comply with the new
accounting principle.
Ruukki Construction
+--------------------------------------------------------------------------+
|EUR million| Q1/07| Q2/07| Q3/07| Q4/07| 2007| Q1/08| Q2/08| Q3/08|
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|Net sales | 213| 258| 278| 292| 1 042| 225| 285| 309|
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|Operating | 34| 40| 51| 38| 163| 21| 38| 56|
|profit | | | | | | | | |
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|as % of net| 16| 16| 18| 13| 16| 9| 13| 18|
|sales | | | | | | | | |
+--------------------------------------------------------------------------+
Ruukki Construction's net sales during January-September 2008 rose to
EUR 818 million (749), up by 9 per cent on the reference period a
year earlier. The division accounted for 27 per cent (26) of
consolidated net sales. Net sales during the third quarter rose to
EUR 309 million (EUR 278 million Q3/2007).
Higher net sales were attributable to strengthened demand for
non-residential construction, improved sales prices and growth in the
frame and project business in Russia, Romania and Poland due to the
completion of new capacity. Infrastructure construction demand and
sales volumes in road and railway construction continued to be at a
good level in all market areas, especially in major road, railway and
bridge projects in the Nordic countries and in harbour projects in
the Nordic countries and Baltics. Demand for pile structures for
building construction slowed towards the end of the report period.
There was continued good demand for roofing components in residential
construction in the Nordic countries, Central Eastern Europe and
Russia. In the Nordic countries, the focus has shifted from new to
renovation construction. Demand in residential construction in the
Baltics was slower than during the reference period.
Ruukki Construction's operating profit for the first nine months of
2008 was EUR 115 million (125). The division's operating profit for
the third quarter increased to EUR 56 million (EUR 51 million
Q3/2007). The costs of starting up the extensive investment programme
in Central Eastern Europe and building the associated organisation
and sales network, as well as higher steel material costs - which
were still not fully reflected in sales prices during the report
period - affected the division's earnings performance for
January-September.
Major new orders and solutions
In July, the company signed a contract worth EUR 9 million to deliver
steel superstructures for the Partihallsförbindelsen bridge project
in Gothenburg, Sweden. In August, a contract worth EUR 10 million was
signed to deliver steel structures for the enlargement of a shopping
centre in Samara, Volga region in Russia.
Ruukki Construction continued to launch new technology solutions on
the market. In September, the division's effective solution to speed
up the construction of single-storey construction was presented in
Romania. Since its launch in spring 2008, contracts for deliveries
based on the single-storey construction concept have been signed for
a total of 15 projects in Central Eastern Europe. The concept is
based on software developed by the company to considerably shorten
the initial stage in a project and ensure the choice of compatible
building components. The solution includes building design,
foundations, frame and envelope structures.
In September, Ruukki Construction presented a new total solution for
performance-based fire design to improve the fire safety of steel
buildings. The solution can be used to ensure the fire safety of
buildings and to choose the most financially most efficient method of
fire protection in each case.
Rautaruukki expanded its business eastwards and opened a sales office
in Kazakhstan in July. In October, after the report period,
Rautaruukki opened a sales office in Belarus.
Capital expenditure
Ruukki Construction has an investment programme of around EUR 120
million under way to expand production capacity in Central Eastern
Europe, Russia and Finland. The sandwich panel line in Romania,
profile production and sandwich panel line at the Ukraine plant and
expansion investments in Russia will start up later this year. In
addition, new sandwich panel lines will be completed in Russia and
Finland in autumn 2009.
Ruukki Engineering
+--------------------------------------------------------------------------+
|EUR million| Q1/07| Q2/07| Q3/07| Q4/07| 2007| Q1/08| Q2/08| Q3/08|
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|Net sales | 167| 163| 157| 180| 667| 188| 205| 184|
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|Operating | 32| 27| 25| 18| 103| 32| 35| 34|
|profit | | | | | | | | |
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|as % of net| 19| 17| 16| 10| 15| 17| 17| 19|
|sales | | | | | | | | |
+--------------------------------------------------------------------------+
Ruukki Engineering's net sales during January-September 2008 were up
by 19 per cent year on year to EUR 578 million (487). The division
accounted for 19 per cent (17) of consolidated net sales. Net sales
during the third quarter rose to EUR 184 million (EUR 157 million
Q3/2007).
Higher net sales were attributable to continued good demand, and thus
larger sales volumes, in the energy industry - especially in the wind
power sector -and in the shipbuilding industry. In addition, growth
in the component business and increased deliveries to the lifting,
handling and transportation equipment industry likewise contributed
to increased net sales. Growth in demand in the forest sector has now
stabilised and the demand for booms for small earthmoving machinery
has somewhat declined.
Ruukki Engineering's operating profit for January-September 2008 rose
to EUR 101 million (84). The division's operating profit for the
third quarter rose to EUR 34 million (EUR 25 million Q3/2007).
Profitability improved as a result of continued strong demand,
increases in sales prices implemented during the year and the
division's profitability improvement programme currently under way.
Ruukki Engineering has been able to compensate for the higher costs
of raw materials, with the exception of customers on an annual
contract basis. These customers account for around 25 per cent of the
division's sales.
Integration of the units acquired by the division in Germany and
Hungary will be completed by the end of this year.
Profitability improvement programme
In February, Ruukki Engineering launched a profitability improvement
programme aimed at improving the division's operating profit by
around EUR 20 million during the current year. Progress has been made
to plan.
To improve profitability, the division's operations have been
streamlined by restructuring production and reorganisation. In this
context, July saw the completion of employer-employee negotiations at
the division's Ruukki Tisza unit in Hungary and with senior salaried
employees in Helsinki, Tampere and Hämeenlinna in Finland. In
Hungary, agreement was reached to cut the number of white-collar jobs
by 190. In Finland, negotiations resulted in the loss of 17 jobs in
division administration. The outcome of the negotiations includes
retirement agreements and the termination of seven contracts.
Capital expenditure
Ruukki Engineering is investing in new manufacturing technology to
boost production and further improve product quality and delivery
reliability. Welding operations are being automated at Wroclaw in
Poland and Peräseinäjoki in Finland. Machining operations are
undergoing further development at the Sepänkylä and Kurikka plants in
Finland and at the Jaszbereny unit in Hungary. The new equipment will
be used in the manufacture of components for the energy industry and
lifting, handling and transportation equipment industry. The
investments are worth around EUR 13 million.
Ruukki Metals
+--------------------------------------------------------------------------+
|EUR million| Q1/07| Q2/07| Q3/07| Q4/07| 2007| Q1/08| Q2/08| Q3/08|
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|Net sales | 531| 552| 464| 488| 2 035| 511| 571| 503|
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|Operating | 116| 115| 96| 68| 395| 96| 106| 112|
|profit | | | | | | | | |
|-----------+-------+-------+-------+-------+------+-------+-------+-------|
|as % of net| 22| 21| 21| 14| 19| 19| 19| 22|
|sales | | | | | | | | |
+--------------------------------------------------------------------------+
All figures are comparable and exclude Ruukki Betonstahl GmbH, Ruukki
Welbond BV and Carl Froh GmbH.
Good demand for steel products continued across all Ruukki Metals'
market areas and customer industries. The division reported net sales
of EUR 1,608 million (1,658) for January-September 2008. Comparable
net sales during January to September amounted to EUR 1,585 million
(1,547). Higher net sales were attributable to sales growth of
special products and increased sales prices. The division accounted
for 54 per cent (57) of consolidated net sales during the report
period.
Net sales during the third quarter rose to EUR 503 million (Q3 2007:
EUR 500 million reported and EUR 464 million comparable). Stainless
steel and aluminium accounted for EUR 184 million (237) of the
division's net sales during January-to September and for EUR 51
million (68) during the third quarter.
Ruukki Metals' reported operating profit for January-September 2008
was EUR 309 million (329). The comparable operating profit for the
same period was EUR 314 million (327). Higher sales prices and an
increase in the share of special products improved profitability,
although the operating profit on stainless steel was EUR 23 million
lower than during the reference period. The division's operating
profit for the third quarter rose to EUR 112 million (EUR 96 million
Q3/2007).
Ruukki Metals is making good progress with its strategy to increase
its share of special products. Special products continued to account
for a growing share of the division's net sales, representing 29 per
cent (25) during the third quarter.
Ruukki Metals continued implementing price increases during the
report period. Price increases are expected to fully cover the higher
costs of raw materials.
Capital expenditure
The machinery at the St Petersburg steel service centre in Russia was
modernised during the report period and a new cut-to-length line will
start up in St Petersburg during the fourth quarter. The new steel
service centre in Oborniki, Poland started up in August and
commissioning will continue during the fourth quarter.
In August, the company decided on a EUR 12 million investment in
Ruukki Metals' steel service centres. In addition, steel service
centre operations are being centralised and the division of work
reorganised between the units. The steel service centres in Naantali
and Järvenpää in Finland and in Halmstad in Sweden are specialising
to further improve delivery accuracy, cost-efficiency and
profitability.
Employer-employee negotiations - held at Ruukki Metals' units in
Järvenpää, Naantali and Halmstad in the context of streamlining and
reorganising steel service centre operations - ended in August. The
negotiations resulted in the loss of 18 jobs.
The Ministry for Economic Development and Trade of the Russian
Federation continues its investigation concerning the anti-dumping of
colour-coated products. If introduced, import duties would apply from
2009 to exports of colour-coated products to Russia. Rautaruukki
manufactures and exports around EUR 30 million of these products to
Russia each year.
Ruukki Production
+---------------------------------------------------------------------------+
|1000 tonnes | Q1/07| Q2/07| Q3/07| Q4/07| 2007| Q1/08| Q2/08| Q3/08|
|------------+-------+-------+-------+-------+------+-------+-------+-------|
|Steel | 703| 672| 610| 561| 2 546| 672| 680| 703|
|production | | | | | | | | |
+---------------------------------------------------------------------------+
Rautaruukki's steel production during January-September increased
slightly to 2,054 thousand tonnes, compared to 1,985 thousand tonnes
during the reference period a year earlier.
The steel production capacity utilisation rate was normal during the
report period. Annual maintenance was mostly carried out during July.
Prices of raw materials have risen sharply on the global market
during the current year. It is estimated higher raw material costs
will add around EUR 220 million to the company's own steel production
costs in 2008 compared to 2007. Around one third of the rise in costs
was realised during the first half of the year.
A total of around EUR 44 million will be spent during the year to
increase special steel production capacity. During the report period,
the production capacity of high-strength and wear-resistant steels
and components for use in the lifting, handling and transportation
equipment industry was increased by a new plasma cutting and
packaging unit, as well as by the commissioning of the first stage of
a new ladle treatment unit. The second half of the year will see the
start up of a cold leveller at the plate mill and an increase in
plasma cutting capacity. Work to upgrade the automation on a
colour-coating line at Antratsyt in Ukraine will be completed in
November, when the line will start up. The line's products are used
mainly in construction.
There was a clear improvement in the division's accident frequency
rate compared to a year earlier. The accident frequency rate was 13
(19) per million hours worked during the first nine months of 2008.
TABLES
This interim report has been prepared in accordance with IAS 34 and
is in conformity with the accounting policies published in the annual
financial statements.
Individual figures and totals appearing in the tables have been
rounded to the nearest full million of euros. The figures given in
the tables are unaudited.
Rautaruukki changed the accounting principle for pension and
disability pension liabilities from 1 January 2008. The change in
accounting principle decreased equity by EUR 58 million, including
the tax effect, and decreased balance sheet assets by EUR 73 million
as at 1 January 2008. Further information about the change in
accounting principle is given at the end of this release.
+-------------------------------------------------------------------+
| SUMMARY CONSOLIDATED INCOME STATEMENT |
|-------------------------------------------------------------------|
| EUR million | Q3/08 | Q3/07 | Q1-Q3/08 | Q1-Q3/07 | 2007 |
|--------------------+-------+-------+----------+----------+--------|
| Net sales | 996 | 935 | 3 004 | 2 895 | 3 876 |
|--------------------+-------+-------+----------+----------+--------|
| Other operating | | | | | |
| income | 5 | 6 | 18 | 16 | 26 |
|--------------------+-------+-------+----------+----------+--------|
| Operating expenses | -769 | -741 | -2 408 | -2 279 | -3 111 |
|--------------------+-------+-------+----------+----------+--------|
| Depreciation, | | | | | |
| amortisation and | | | | | |
| impairment losses | -36 | -39 | -109 | -114 | -153 |
|--------------------+-------+-------+----------+----------+--------|
| Operating profit | 197 | 162 | 505 | 518 | 637 |
|--------------------+-------+-------+----------+----------+--------|
| Finance income and | | | | | |
| expense | -2 | -4 | -6 | -10 | -20 |
|--------------------+-------+-------+----------+----------+--------|
| Share of results | | | | | |
| of associated | | | | | |
| companies | 1 | 1 | 3 | 3 | 3 |
|--------------------+-------+-------+----------+----------+--------|
| Profit before | | | | | |
| taxes | 195 | 159 | 503 | 512 | 621 |
|--------------------+-------+-------+----------+----------+--------|
| Taxes | -56 | -41 | -134 | -132 | -162 |
|--------------------+-------+-------+----------+----------+--------|
| Profit for the | | | | | |
| period | 139 | 118 | 368 | 380 | 459 |
|--------------------+-------+-------+----------+----------+--------|
| Attributable to: | | | | | |
|--------------------+-------+-------+----------+----------+--------|
| Equity | | | | | |
| shareholders of | | | | | |
| the parent | 139 | 117 | 368 | 379 | 458 |
|--------------------+-------+-------+----------+----------+--------|
| Minority interests | 0 | 0 | 0 | 1 | 1 |
|--------------------+-------+-------+----------+----------+--------|
| | | | | | |
|--------------------+-------+-------+----------+----------+--------|
| Diluted earnings | | | | | |
| per share, EUR | 1.00 | 0.85 | 2.65 | 2.74 | 3.31 |
|--------------------+-------+-------+----------+----------+--------|
| Basic earnings per | | | | | |
| share, EUR | 1.00 | 0.85 | 2.65 | 2.74 | 3.31 |
|--------------------+-------+-------+----------+----------+--------|
| Operating profit | | | | | |
| as % of net sales | 19.7 | 17.3 | 16.8 | 17.9 | 16.4 |
+-------------------------------------------------------------------+
+---------------------------------------------------------+
| SUMMARY CONSOLIDATED BALANCE SHEET |
|---------------------------------------------------------|
| EUR million | 30 Sep | 30 Sep | 31 Dec |
| | 2008 | 2007 | 2007 |
|------------------------------+--------+--------+--------|
| ASSETS | | | |
|------------------------------+--------+--------+--------|
| Non-current assets | 1 444 | 1 454 | 1 447 |
|------------------------------+--------+--------+--------|
| Current assets | | | |
|------------------------------+--------+--------+--------|
| Inventories | 747 | 738 | 614 |
|------------------------------+--------+--------+--------|
| Trade and other receivables | 745 | 660 | 579 |
|------------------------------+--------+--------+--------|
| Cash and cash equivalents | 50 | 41 | 196 |
|------------------------------+--------+--------+--------|
| | 2 987 | 2 893 | 2 835 |
|------------------------------+--------+--------+--------|
| | | | |
|------------------------------+--------+--------+--------|
| EQUITY AND LIABILITIES | | | |
|------------------------------+--------+--------+--------|
| Equity | | | |
|------------------------------+--------+--------+--------|
| Equity attributable to | | | |
| shareholders of the parent | 1 997 | 1 886 | 1 960 |
|------------------------------+--------+--------+--------|
| Minority interests | 2 | 3 | 3 |
|------------------------------+--------+--------+--------|
| Non-current liabilities | | | |
|------------------------------+--------+--------+--------|
| Interest-bearing | 132 | 201 | 138 |
|------------------------------+--------+--------+--------|
| Other | 177 | 200 | 189 |
|------------------------------+--------+--------+--------|
| Current liabilities | | | |
|------------------------------+--------+--------+--------|
| Interest-bearing | 74 | 31 | 86 |
|------------------------------+--------+--------+--------|
| Trade payables and other | | | |
| liabilities | 605 | 573 | 461 |
|------------------------------+--------+--------+--------|
| | 2 987 | 2 893 | 2 835 |
+---------------------------------------------------------+
+-------------------------------------------------------------------+
| SUMMARY CASH FLOW STATEMENT * |
|-------------------------------------------------------------------|
| EUR million | Q1-Q3/08 | Q1-Q3/07 | 2007* |
|----------------------------+-------------+-------------+----------|
| Profit for the period | 368 | 379 | 458 |
|----------------------------+-------------+-------------+----------|
| Adjustments | 214 | 230 | 290 |
|----------------------------+-------------+-------------+----------|
| Cash flow before change in | | | |
| working capital | 583 | 609 | 749 |
|----------------------------+-------------+-------------+----------|
| Change in working capital | -179 | -208 | -112 |
|----------------------------+-------------+-------------+----------|
| Financing items and taxes | -120 | -158 | -219 |
|----------------------------+-------------+-------------+----------|
| Cash flow from operating | | | |
| activities | 284 | 244 | 417 |
|----------------------------+-------------+-------------+----------|
| Cash inflow from investing | | | |
| activities | 21 | 16 | 70 |
|----------------------------+-------------+-------------+----------|
| Cash outflow from | | | |
| investing activities | -164 | -152 | -217 |
|----------------------------+-------------+-------------+----------|
| Cash flow from investing | | | |
| activities, total | -142 | -136 | -146 |
|----------------------------+-------------+-------------+----------|
| Cash flow before financing | | | |
| activities | 142 | 108 | 271 |
|----------------------------+-------------+-------------+----------|
| Dividends paid | -277 | -276 | -276 |
|----------------------------+-------------+-------------+----------|
| Change in debt | -13 | -146 | -155 |
|----------------------------+-------------+-------------+----------|
| Other net cash flow from | | | |
| financing activities | 4 | -6 | -6 |
|----------------------------+-------------+-------------+----------|
| Change in cash and cash | | | |
| equivalents | -145 | -320 | -166 |
|-------------------------------------------------------------------|
| * Changes in the classification of items and in working capital |
| have been made in cash flow. Figures for the reference periods |
| have been restated accordingly. |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| KEY FIGURES | Q1-Q3/08 | Q1-Q3/07 | 2007 |
|--------------------------+--------------+--------------+----------|
| Net sales, EUR m | 3 004 | 2 895 | 3 876 |
|--------------------------+--------------+--------------+----------|
| Operating profit, EUR m | 505 | 518 | 637 |
|--------------------------+--------------+--------------+----------|
| as % of net sales | 16.8 | 17.9 | 16.4 |
|--------------------------+--------------+--------------+----------|
| Profit before taxes, EUR | | | |
| m | 503 | 512 | 621 |
|--------------------------+--------------+--------------+----------|
| as % of net sales | 16.7 | 17.7 | 16.0 |
|--------------------------+--------------+--------------+----------|
| Profit for the period, | | | |
| EUR m | 368 | 379 | 459 |
|--------------------------+--------------+--------------+----------|
| as % of net sales | 12.3 | 13.1 | 11.8 |
|--------------------------+--------------+--------------+----------|
| Return on capital | | | |
| employed, % * | 29.6 | 37.9 | 29.8 |
|--------------------------+--------------+--------------+----------|
| Return on equity, % * | 23.0 | 33.8 | 24.2 |
|--------------------------+--------------+--------------+----------|
| Equity ratio, % * | 68.0 | 67.1 | 70.1 |
|--------------------------+--------------+--------------+----------|
| Gearing ratio, % * | 7.8 | 10.1 | 1.4 |
|--------------------------+--------------+--------------+----------|
| Net interest-bearing | | | |
| liabilities, EUR m | 155 | 190 | 28 |
|--------------------------+--------------+--------------+----------|
| Equity per share, EUR * | 14.39 | 13.63 | 14.13 |
|--------------------------+--------------+--------------+----------|
| Personnel on average * | 15 086 | 14 225 | 14 326 |
|--------------------------+--------------+--------------+----------|
| Number of shares | | | 140 198 |
| | 140 215 328 | 140 194 524 | 128 |
|--------------------------+--------------+--------------+----------|
| - excluding treasury | | | 138 721 |
| shares | 138 748 391 | 138 717 587 | 191 |
|--------------------------+--------------+--------------+----------|
| - diluted, average | | | 138 566 |
| | 138 788 490 | 138 495 687 | 355 |
|-------------------------------------------------------------------|
| Return on capital employed and return on equity are based on the |
| previous 12 months. |
| * The reference periods have been restated in accordance with the |
| new accounting principle. |
+-------------------------------------------------------------------+
+------------------------------------------------------------------------------------------------+
|CHANGE IN EQUITY Q1-Q3 / 2008 |
|------------------------------------------------------------------------------------------------|
|EUR million |Attributable to equity shareholders of the parent |
|--------------------------+---------------------------------------------------------------------|
| | Share |Shareprem.act.|Fair value|Translation|Retained|Total|Minority|
| |capital| |and other | diff. |earnings| | int. |
| | | | reserves | | | | |
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|EQUITY AT 1 JAN | 238| 220| 9| -6| 1 498|1 960| 3|
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Cash flow hedges, net of | | | | | | | |
|tax | | | -17| | | -17| |
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Actuarial gains and | | | | | | | |
|losses, net of tax | | | | | -34| -34| |
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Change in translation | | | | | | | |
|difference | | | | -2| | -2| |
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Net income and expense | | | | | | | |
|recognised directly in | | | | | | | |
|equity | 0| 0| -17| -2| -34| -53| 0|
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Profit for the period | | | | | 368| 368| 0|
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Total income and expense | | | | | | | |
|recognised for the period | 0| 0| -17| -2| 334| 315| 0|
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Share-based payments, net | | | | | | | |
|of tax | | | 0| | | 0| |
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Disposal of treasury | | | | | | | |
|shares | | | 0| | 0| 0| |
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|Dividend distribution | | | | | -277| -277| 0|
|--------------------------+-------+--------------+----------+-----------+--------+-----+--------|
|EQUITY AT 30 SEP | 238| 220| -7| -8| 1 555|1 997| 2|
+------------------------------------------------------------------------------------------------+
+-------------------------------------------------------------------------------------------------+
|CHANGE IN EQUITY Q1-Q3 / 2007 |
|-------------------------------------------------------------------------------------------------|
|EUR million |Attributable to equity shareholders of the parent |
|--------------------------+----------------------------------------------------------------------|
| | Share |Shareprem.act.|Fair value|Translation|Retained |Total|Minority|
| |capital| |and other | diff. |earn-ings| | int. |
| | | | reserves | | | | |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|EQUITY AT 1 JAN | 238| 220| 44| -3| 1 326|1 825| 1|
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Cash flow hedges, net of | | | | | | | |
|tax | | | -24| | | -24| |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Actuarial gains and | | | | | | | |
|losses, net of tax | | | | | -12| -12| |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Change in translation | | | | | | | |
|difference | | | | -3| -3| -6| |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Net income and expense | | | | | | | |
|recognised directly in | | | | | | | |
|equity | 0| 0| -24| -3| -15| -42| 0|
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Profit for the period | | | | | 379| 379| 1|
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Total income and expense | | | | | | | |
|recognised for the period | 0| 0| -24| -3| 364| 337| 1|
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Share-based payments, net | | | | | | | |
|of tax | | | 0| | 0| 0| |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Disposal of treasury | | | | | | | |
|shares | | | -3| | 3| 0| |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|Dividend distribution | | | | | -276| -276| |
|--------------------------+-------+--------------+----------+-----------+---------+-----+--------|
|EQUITY AT 30 SEP | | | | | | | |
| | 238| 220| 17| -6| 1 417|1 886| 3|
+-------------------------------------------------------------------------------------------------+
+-------------------------------------------------------------------+
| CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE * |
|-------------------------------------------------------------------|
| EUR million | Q1-Q3/08 | Q1-Q3/07 | 2007 |
|------------------------------+-------------+-------------+--------|
| Profit for the period | 368 | 380 | 459 |
|------------------------------+-------------+-------------+--------|
| Cash flow hedges, net of tax | -17 | -24 | -33 |
|------------------------------+-------------+-------------+--------|
| Translation difference on | | | |
| net investments in | | | |
| subsidiaries | -2 | -6 | 1 |
|------------------------------+-------------+-------------+--------|
| Defined benefit plan | | | |
| actuarial gains (losses), | | | |
| net of tax | -34 | -12 | -16 |
|------------------------------+-------------+-------------+--------|
| Net income and expense | | | |
| recognised directly in | | | |
| equity | -53 | -42 | -48 |
|------------------------------+-------------+-------------+--------|
| Total income and expense | | | |
| recognised for the period | 315 | 337 | 411 |
|------------------------------+-------------+-------------+--------|
| | | | |
|------------------------------+-------------+-------------+--------|
| Recognised income and | | | |
| expense attributable to | | | |
| minority interests during | | | |
| the period | 0 | 1 | 1 |
|------------------------------+-------------+-------------+--------|
| Recognised income and | | | |
| expense attributable to | | | |
| shareholders during the | | | |
| period | 315 | 337 | 410 |
|------------------------------+-------------+-------------+--------|
| Total income and expense | | | |
| recognised for the period | 315 | 337 | 411 |
|-------------------------------------------------------------------|
| * The statement includes the profit for the period and gains and |
| losses recognised directly in equity in accordance with IFRS |
| standards. |
+-------------------------------------------------------------------+
+--------------------------------------------------------------------------------------+
|NET SALES BY DIVISION |
|--------------------------------------------------------------------------------------|
|EUR million | Q1-Q3/08| Q1-Q3/07| 2007| Q1-Q3/08| Q1-Q3/07| 2007| |
| | | | | comparable| comparable| comparable| |
|---------------------+---------+---------+------+-----------+-----------+-----------+-|
|Ruukki Construction | 818| 749| 1 042| 818| 749| 1 042| |
|---------------------+---------+---------+------+-----------+-----------+-----------+-|
|Ruukki Engineering | 578| 487| 667| 578| 487| 667| |
|---------------------+---------+---------+------+-----------+-----------+-----------+-|
|Ruukki Metals | 1 608| 1 658| 2 168| 1 585| 1 547| 2 035| |
|---------------------+---------+---------+------+-----------+-----------+-----------+-|
|Corporate management | | | | | | | |
|and other units | 0| 0| 0| 0| 0| 0| |
|---------------------+---------+---------+------+-----------+-----------+-----------+-|
|Consolidated net | | | | | | | |
|sales | 3 004| 2 895| 3 876| 2 981| 2 784| 3 744| |
|------------------------------------------------------------------------------------+-|
|Comparable = excluding Ruukki Betonstahl GmbH, Ruukki Welbond BV and Carl Froh GmbH.| |
+--------------------------------------------------------------------------------------+
+--------------------------------------------------------------------------------------+
|OPERATING PROFIT BY DIVISION |
|--------------------------------------------------------------------------------------|
|EUR million | Q1-Q3/08| Q1-Q3/07| 2007| Q1-Q3/08| Q1-Q3/07| 2007| |
| | | | | comparable| comparable| comparable| |
|----------------------+---------+---------+-----+-----------+-----------+-----------+-|
|Ruukki Construction | 115| 125| 163| 115| 125| 163| |
|----------------------+---------+---------+-----+-----------+-----------+-----------+-|
|Ruukki Engineering | 101| 84| 103| 101| 84| 103| |
|----------------------+---------+---------+-----+-----------+-----------+-----------+-|
|Ruukki Metals | 309| 329| 397| 314| 327| 395| |
|----------------------+---------+---------+-----+-----------+-----------+-----------+-|
|Corporate management | | | | | | | |
|and other units | -19| -20| -25| -19| -20| -25| |
|----------------------+---------+---------+-----+-----------+-----------+-----------+-|
|Consolidated operating| | | | | | | |
|profit | 505| 518| 637| 511| 516| 635| |
|------------------------------------------------------------------------------------+-|
|Comparable = excluding Ruukki Betonstahl GmbH, Ruukki Welbond BV and Carl Froh GmbH.| |
+--------------------------------------------------------------------------------------+
+----------------------------------------------------------------------+
|QUARTERLY NET SALES | |
|----------------------------------------------------------------+-----|
|EUR million |Q1/07|Q2/07|Q3/07|Q4/07|Q1/08|Q2/08|Q3/08|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Ruukki Construction | 213| 258| 278| 292| 225| 285| 309|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Ruukki Engineering | 167| 163| 157| 180| 188| 205| 184|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Ruukki Metals | 570| 588| 500| 509| 525| 580| 503|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Corporate management and | | | | | | | |
|other units | 0| 0| 0| 0| 1| -1| 0|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Consolidated net sales | 950|1 009| 935| 982| 939|1 069| 996|
+----------------------------------------------------------------------+
+----------------------------------------------------------------------+
|QUARTERLY OPERATING PROFIT | |
|----------------------------------------------------------------+-----|
|EUR million |Q1/07|Q2/07|Q3/07|Q4/07|Q1/08|Q2/08|Q3/08|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Ruukki Construction | 34| 40| 51| 38| 21| 38| 56|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Ruukki Engineering | 32| 27| 25| 18| 32| 35| 34|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Ruukki Metals | 117| 115| 96| 68| 97| 100| 112|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Corporate management and | | | | | | | |
|other units | -6| -5| -10| -5| -7| -7| -5|
|----------------------------+-----+-----+-----+-----+-----+-----+-----|
|Consolidated operating | | | | | | | |
|profit | 178| 178| 162| 120| 143| 166| 197|
+----------------------------------------------------------------------+
+----------------------------------------------------------------------+
|QUARTERLY NET SALES (COMPARABLE) EXCLUDING RUUKKI BETONSTAHL, | |
|RUUKKI WELBOND and CARL FROH | |
|----------------------------------------------------------------+-----|
|EUR million | Q1/07| Q2/07| Q3/07| Q4/07| Q1/08| Q2/08|Q3/08|
|-------------------+-------+-------+-------+------+------+------+-----|
|Ruukki Construction| 213| 258| 278| 292| 225| 285| 309|
|-------------------+-------+-------+-------+------+------+------+-----|
|Ruukki Engineering | 167| 163| 157| 180| 188| 205| 184|
|-------------------+-------+-------+-------+------+------+------+-----|
|Ruukki Metals | 531| 552| 464| 488| 511| 571| 503|
|-------------------+-------+-------+-------+------+------+------+-----|
|Corporate | | | | | | | |
|management and | | | | | | | |
|other units | 0| 0| 0| 0| 1| -1| 0|
|-------------------+-------+-------+-------+------+------+------+-----|
|Consolidated net | | | | | | | |
|sales | 911| 973| 899| 960| 925| 1 060| 996|
+----------------------------------------------------------------------+
+----------------------------------------------------------------------+
|QUARTERLY OPERATING PROFIT (COMPARABLE) EXCLUDING RUUKKI | |
|BETONSTAHL, RUUKKI WELBOND and CARL FROH | |
|----------------------------------------------------------------+-----|
|EUR million | Q1/07| Q2/07| Q3/07| Q4/07| Q1/08|Q2/08|Q3/08|
|-----------------------+------+------+------+------+------+-----+-----|
|Ruukki Construction | 34| 40| 51| 38| 21| 38| 56|
|-----------------------+------+------+------+------+------+-----+-----|
|Ruukki Engineering | 32| 27| 25| 18| 32| 35| 34|
|-----------------------+------+------+------+------+------+-----+-----|
|Ruukki Metals | 116| 115| 96| 68| 96| 106| 112|
|-----------------------+------+------+------+------+------+-----+-----|
|Corporate management | | | | | | | |
|and other units | -6| -5| -10| -5| -7| -7| -5|
|-----------------------+------+------+------+------+------+-----+-----|
|Consolidated operating | | | | | | | |
|profit | 177| 178| 162| 119| 141| 172| 197|
+----------------------------------------------------------------------+
+------------------------------------------------------+
| NET SALES BY REGION |
|------------------------------------------------------|
| As % of net sales | Q1-Q3/08 | Q1-Q3/07 | 2007 |
|-------------------------+----------+----------+------|
| Finland | 32 | 32 | 31 |
|-------------------------+----------+----------+------|
| Other Nordic countries | 31 | 30 | 30 |
|-------------------------+----------+----------+------|
| Central Eastern Europe, | | | |
| Russia and Ukraine | 21 | 21 | 21 |
|-------------------------+----------+----------+------|
| Rest of Europe | 13 | 15 | 15 |
|-------------------------+----------+----------+------|
| Other countries | 3 | 2 | 3 |
+------------------------------------------------------+
+-----------------------------------------------------------+
| CONTINGENT LIABILITIES |
|-----------------------------------------------------------|
| EUR million | Sep 08 | Sep 07 | Dec 07 |
|--------------------------------+--------+--------+--------|
| Mortgaged real estates | 24 | 23 | 24 |
|--------------------------------+--------+--------+--------|
| Pledges given | 6 | 6 | 5 |
|--------------------------------+--------+--------+--------|
| Other guarantees given | 38 | 40 | 41 |
|--------------------------------+--------+--------+--------|
| Collateral | | | |
|--------------------------------+--------+--------+--------|
| Given on behalf of | | | |
| associates | 0 | 0 | 0 |
|--------------------------------+--------+--------+--------|
| Given on behalf of others | 6 | 5 | 6 |
|--------------------------------+--------+--------+--------|
| Leasing and rental liabilities | 142 | 114 | 154 |
|--------------------------------+--------+--------+--------|
| Other financial liabilities | 0 | 0 | 0 |
+-----------------------------------------------------------+
+-------------------------------------------------------------+
| VALUES OF DERIVATIVE CONTRACTS AT 30 SEPTEMBER 2008 |
|-------------------------------------------------------------|
| |
|-------------------------------------------------------------|
| CASH FLOW HEDGES QUALIFYING FOR HEDGE ACCOUNTING |
|-------------------------------------------------------------|
| | Nominal amount | Fair value |
| | | EUR million |
|------------------------------+----------------+-------------|
| Zinc derivatives | | |
|------------------------------+----------------+-------------|
| Forward contracts, tonnes | 40 500 | -22.9 |
|------------------------------+----------------+-------------|
| Electricity derivatives | | |
|------------------------------+----------------+-------------|
| Forward contracts, Gwh | 1 348 | 12.3 |
|-------------------------------------------------------------|
| |
|-------------------------------------------------------------|
| DERIVATIVES NOT QUALIFYING FOR HEDGE ACCOUNTING |
|-------------------------------------------------------------|
| | Nominal value | Fair value |
| | EUR million | EUR million |
|------------------------------+----------------+-------------|
| Foreign currency derivatives | | |
|------------------------------+----------------+-------------|
| Forward contracts | 757 | 12.5 |
|------------------------------+----------------+-------------|
| Options | | |
|------------------------------+----------------+-------------|
| Bought | 230 | 8.2 |
|------------------------------+----------------+-------------|
| Sold | 230 | 3.1 |
|------------------------------+----------------+-------------|
| | | 11.3 |
+-------------------------------------------------------------+
The unrealised result of cash flow hedges is recognised in equity to
the extent the hedge is effective. Other changes in fair value are
recorded through profit and loss.
+------------------------------------------------------------------+
| CHANGES IN PLANT, PROPERTY AND EQUIPMENT |
|------------------------------------------------------------------|
| EUR million | Q1-Q3/08 | Q1-Q3/07 | 2007 |
|------------------------------------+----------+----------+-------|
| Carrying value at start of period | 1 076 | 1 043 | 1 043 |
|------------------------------------+----------+----------+-------|
| Additions | 151 | 106 | 157 |
|------------------------------------+----------+----------+-------|
| Additions through acquisitions | 4 | 13 | 18 |
|------------------------------------+----------+----------+-------|
| Disposals | -3 | -5 | -11 |
|------------------------------------+----------+----------+-------|
| Disposals through divestments | -23 | 0 | 0 |
|------------------------------------+----------+----------+-------|
| Depreciation and value adjustments | -90 | -96 | -129 |
|------------------------------------+----------+----------+-------|
| Exchange rate differences | 1 | 1 | -1 |
|------------------------------------+----------+----------+-------|
| Carrying value at end of period | 1 116 | 1 061 | 1 076 |
+------------------------------------------------------------------+
+-------------------------------------------------------------------+
| TRANSACTIONS WITH RELATED PARTIES |
|-------------------------------------------------------------------|
| EUR million | Q1-Q3/08 | Q1-Q3/07 | 2007 |
|--------------------------------------+----------+----------+------|
| Transactions with associated | | | |
| companies | | | |
|--------------------------------------+----------+----------+------|
| Sales to associated companies | 16 | 18 | 23 |
|--------------------------------------+----------+----------+------|
| Purchases from associated companies | 6 | 5 | 7 |
|--------------------------------------+----------+----------+------|
| Trade and other receivables at 30 | | | |
| September | 7 | 5 | 6 |
|--------------------------------------+----------+----------+------|
| Trade and other creditors at 30 | | | |
| September | 1 | 1 | 0 |
|--------------------------------------+----------+----------+------|
| Transactions with Pension Foundation | 4 | 4 | 6 |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| INVESTMENT COMMITMENTS * | |
|--------------------------------------+----------------------------|
| EUR million | After 30 September 2008 |
|--------------------------------------+----------------------------|
| Maintenance investments | 133 |
|--------------------------------------+----------------------------|
| Development investments and | |
| investments in special products | 165 |
|--------------------------------------+----------------------------|
| Total | 297 |
|-------------------------------------------------------------------|
| * Investment commitments include the estimated costs of projects |
| that have received permission to go ahead. |
+-------------------------------------------------------------------+
+-------------------------------------------------------------------+
| INFORMATION ABOUT ACQUISITIONS | | |
| * | | |
|---------------------------------+------------+--------------------|
| EUR million | Fair value | Acquired company's |
| | | carrying amount |
|---------------------------------+------------+--------------------|
| Assets and liabilities of | | |
| acquired companies (carrying | | |
| amount) | | |
|---------------------------------+------------+--------------------|
| Non-current assets | 7 | 0 |
|---------------------------------+------------+--------------------|
| Current assets | | |
|---------------------------------+------------+--------------------|
| Inventories | 0 | 0 |
|---------------------------------+------------+--------------------|
| Trade and other receivables | 1 | 1 |
|---------------------------------+------------+--------------------|
| Cash and cash equivalents | 0 | 0 |
|---------------------------------+------------+--------------------|
| Total assets | 8 | 1 |
|---------------------------------+------------+--------------------|
| Non-current liabilities | | |
|---------------------------------+------------+--------------------|
| Interest-bearing | 0 | 0 |
|---------------------------------+------------+--------------------|
| Other | 1 | 0 |
|---------------------------------+------------+--------------------|
| Current liabilities | | |
|---------------------------------+------------+--------------------|
| Interest-bearing | 0 | 0 |
|---------------------------------+------------+--------------------|
| Other | 1 | 1 |
|---------------------------------+------------+--------------------|
| Total liabilities | 2 | 1 |
|---------------------------------+------------+--------------------|
| | | |
|---------------------------------+------------+--------------------|
| Net assets | 6 | 0 |
|---------------------------------+------------+--------------------|
| | | |
|---------------------------------+------------+--------------------|
| Acquisition cost | 8 | |
|---------------------------------+------------+--------------------|
| - including conditional | | |
| purchase price | 2 | |
|---------------------------------+------------+--------------------|
| Goodwill | 2 | |
|---------------------------------+------------+--------------------|
| | | |
|---------------------------------+------------+--------------------|
| Acquisition cost paid in cash | 6 | |
|---------------------------------+------------+--------------------|
| Cash and cash equivalents of | | |
| the acquired subsidiary | 0 | |
|---------------------------------+------------+--------------------|
| Impact on cash flow | 6 | |
|-------------------------------------------------------------------|
| * Includes information about the acquisition of Wolter |
| Metallverarbeitung GmbH and business of Hybri-Steel Oy. |
+-------------------------------------------------------------------+
CHANGES IN ACCOUNTING PRINCIPLES
Until 2008, the company applied the "corridor method" to recognise
actuarial gains and losses relating to its defined benefit pension
plans. This meant that actuarial gains and losses were expensed over
the assumed average remaining working lives of people in the plan.
From 1 January 2008, the company applies a revised interpretation of
IAS 19 Employee Benefits, which allows all actuarial gains and losses
to be recognised directly in equity in the period in which they occur
instead of in the income statement. The comparable figures are also
presented accordingly. The change in accounting principle decreased
equity, net of tax, by EUR 24 million at 31 December 2007 (EUR 7
million at year-end 2006).
The company has changed the IFRS interpretation of the Finnish
disability benefit from a defined contribution plan to a defined
benefit plan with effect from 1 January 2008. This change will
increase IFRS pension costs by an estimated EUR 6 million in 2008.
The ensuing actuarial loss as a result of this change was recognised
as a decrease in equity in accordance with the accounting practice
referred to above. The change decreased equity, net of tax, by EUR 34
million. The change marks a shift to using the interpretation applied
by the majority of companies on the market preparing financial
statements in accordance with IFRS.
+-------------------------------------------------------------------+
| CONSOLIDATED BALANCE | | | |
| SHEET | 31 Dec 2007 | 31 Dec 2007 | 1 Jan 2008 |
|--------------------------+-------------+-------------+------------|
| | published | amended* | amended** |
|--------------------------+-------------+-------------+------------|
| ASSETS | | | |
|--------------------------+-------------+-------------+------------|
| Non-current assets | 1 473 | 1 447 | 1 400 |
|--------------------------+-------------+-------------+------------|
| Current assets | | | |
|--------------------------+-------------+-------------+------------|
| Inventories | 614 | 614 | 614 |
|--------------------------+-------------+-------------+------------|
| Trade and other | | | |
| receivables | 579 | 579 | 579 |
|--------------------------+-------------+-------------+------------|
| Cash and cash | | | |
| equivalents | 196 | 196 | 196 |
|--------------------------+-------------+-------------+------------|
| | 2 861 | 2 835 | 2 789 |
|--------------------------+-------------+-------------+------------|
| | | | |
|--------------------------+-------------+-------------+------------|
| EQUITY AND LIABILITIES | | | |
|--------------------------+-------------+-------------+------------|
| Equity | | | |
|--------------------------+-------------+-------------+------------|
| Equity attributable to | | | |
| shareholders of the | | | |
| parent | 1 984 | 1 960 | 1 925 |
|--------------------------+-------------+-------------+------------|
| Minority interests | 3 | 3 | 3 |
|--------------------------+-------------+-------------+------------|
| Non-current liabilities | | | |
|--------------------------+-------------+-------------+------------|
| Interest-bearing | | | |
| liabilities | 138 | 138 | 138 |
|--------------------------+-------------+-------------+------------|
| Other non-current | | | |
| liabilities | 191 | 189 | 177 |
|--------------------------+-------------+-------------+------------|
| Current liabilities | | | |
|--------------------------+-------------+-------------+------------|
| Interest-bearing | | | |
| liabilities | 86 | 86 | 86 |
|--------------------------+-------------+-------------+------------|
| Trade payables and other | | | |
| liabilities | 460 | 460 | 460 |
|--------------------------+-------------+-------------+------------|
| | 2 861 | 2 835 | 2 789 |
+-------------------------------------------------------------------+
* Change concerning the recognition of actuarial gains and losses.
** Change concerning the interpretation of disability.
Formulas for the calculation of key indicators:
profit before extraordinary items (FAS)
/ taxes (IFRS) + interest expense +/-
exchange rate differences + other
financial expense (excl. depreciation
Return on capital for short-term investments)
employed, % = 100 x _________________________________
[balance sheet total (2 - obligatory
provisions and non-interest-bearing
debt] (average during the year)
profit before extraordinary items (FAS)
/ taxes (IFRS) - taxes (1
Return on equity, % = 100 x _________________________________
[capital and reserves (2 + minority
interests] (average during the year)
capital and reserves (2 + minority
interests
Equity ratio, % = 100 x _________________________________
balance sheet total (2 - current
advanced payments received
interest-bearing net debt
Gearing ratio, % = 100 x _________________________________
capital and reserves (2 + minority
interests
Net interest-bearing interest-bearing debt - cash and other
debt = liquid current assets
profit before extraordinary items (FAS)
/ taxes (IFRS) - minority interests -
taxes (1
Earnings per share = _________________________________
adjusted average number of shares (2
equity attributable to shareholders of
the parent (2
Equity per share = _________________________________
adjusted number of shares at balance
sheet date (2
total EUR trading of shares
Average share price = _________________________________
average number of shares
Market number of shares x closing price at
capitalisation = balance sheet date
1) Taxes have been stated without taxes related to extraordinary
items.
2) Treasury shares held by the company are not included in the number
of shares, shareholders' equity or total assets in the indicators.
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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