Rautaruukki Corporation has announced interim report for Q3 2011. Highlights are:

July to September 2011 period:
Order intake was up 18 per cent at EUR 678 million
Comparable net sales were up 10% at EUR 674 million
Comparable operating profit was EUR 1 million
Comparable result before taxes was EUR 4 million

January to September 2011:
Order intake was up 21 per cent at EUR 2,024 million
Comparable net sales were up 18 per cent at EUR 2,079 million
Comparable operating profit was EUR 96 million
Comparable result before taxes was EUR 72 million

Estimate of financial performance in 2011
Consolidated net sales in 2011 are estimated to grow approximately 15% to 20% YoY. Profitability is estimated to improve compared to 2010.

In EUR million

Mr Sakari Tamminen president & CEO of Rautaruukki said that "Our third quarter was divided into two. Because of the general uncertainty caused by the debt crisis in Europe, mill deliveries in our steel business were well below expectations. Our steel business, and with it the operations of the entire company, posted a loss for the third quarter. On a positive note, there was continued strong order flow and improved profitability in our solutions businesses construction and engineering."

He added that "Our order intake was up 18 per cent year on year at EUR 678 million. There was good growth in demand in Finland and Central Eastern Europe, especially Poland, and also in Russia. Orders in the construction and engineering businesses showed favorable development and the level of activity in customer industries is good. On the other hand, mill deliveries in our steel business, where demand is based on long term needs and wholesale demand, have been weaker than expected. Mill deliveries account for over half the total deliveries in the business area. Our net sales for the third quarter were up 10 per cent year on year at EUR 674 million. Relatively best net sales growth was in Central Eastern Europe, where growth came mostly from the construction business."

Mr Sakari Tamminen said that "The company's gearing ratio rose to around 68% because of tied up net working capital, investments and the loss made by the steel business. Delivery volumes in the steel business were too low to free up working capital at the rate we anticipated. One of the main targets is to free up working capital in our steel business to align the gearing ratio with the company's long term target of 60%. In the construction business, positive notes were improved operating profit, as well as growth in order volumes of residential roofing products in almost all market areas. Also commercial and industrial construction deliveries grew, especially in Finland, the other Nordic countries and Ukraine. In Russia, too, there was continued good demand for commercial and industrial construction. Capacity utilization rates have improved in the construction business."

He added that "In the engineering business, the markets in our main customer segments were good. Our engineering business moved back into the black during the third quarter and operating profit was up more than 30% year on year. Growth was highest in delivery volumes of cabins, frames and booms for the lifting, handling and transportation equipment industry. Also deliveries to construction and mining equipment and forest machine manufacturers showed further growth. Growth leveled off in the steel markets mostly because of the uncertainty in the financial markets in Europe and cautious decision making due to the weakened economic outlook. In our steel business, the fall in order intake was visible especially in mill deliveries. Service centre sales, where demand is based on short-term needs, remained at a good level. Net sales developed relatively well in the Nordic countries, Central Eastern Europe and Russia. Sales of special steel products remained at a good level in Western Europe, but in many new markets such as China deliveries decreased. Special steel products accounted for 32% of net sales in the steel business for the third quarter. The loss posted for the third quarter was mainly due to higher raw material costs and a lower capacity utilization rate in steel production, which was affected by modernization of blast furnace 2 at the Raahe Steel Works."

Mr Tamminen said that "Production capacity in the European steel markets has been adjusted throughout the line. Utilization rates are usually lower towards the end of the year than at the start. The capacity utilization rate in our steel business is estimated to be around 80 per cent during the fourth quarter. This is why profitability of our steel business during the second half of the year will be weaker than during the corresponding period in 2010. In the solutions businesses, we anticipate that market conditions will remain reasonably good for the rest of the year. Based on this, we forecast the capacity utilization rate in the construction and engineering businesses will be better in 2011 than in 2010. Consolidated net sales in 2011 are estimated to grow approximately 15% to 20% year on year. Profitability is estimated to improve compared to 2010."