Rautaruukki Corporation has announced interim report for first half of 2009. Summary of first half results for 2009 are as follows:
1. Consolidated net sales decreased to EUR 944 million
2. Consolidated reported negative operating profit was EUR 230 million and operating profit excluding non recurring items was EUR 225 million
3. Result before taxes EUR 249 million
4. Gearing ratio was 22.9%
5. Cash flow from operating activities was EUR 82 million
6. Return on capital employed was 1.9%
First half of 2009 in brief:
1. Caution in investment decisions and poor functioning of the financial markets continued to be reflected in sales of construction products and solutions in particular.
2. In the engineering business, delivery volumes to equipment manufacturers in the energy industry remained at a good level. However, high stock levels throughout the supply chain weakened demand especially from equipment manufacturers in the lifting, handling and transportation industry.
3. Poor demand for steel products continued and prices of steel products were low. The fall in prices started to level off towards the end of the report period. The operation of steel production at a low capacity utilization rate weakened financial performance considerably.
4. The weakening of a number of sales currencies against the euro decreased consolidated net sales.
5. Cash flow from operating activities was positive and the company's financial position remained strong.
6. Cost savings through operational efficiency improvement actions and adjustment measures are expected to impact in full during the second half of the year.
Mr Sakari Tamminen president & CEO of Rautaruukki Corporation said that "Exceptionally weak market conditions in countries where Ruukki operates continued into the second quarter and it is still difficult to predict market development. In many of our customer industries, de-stocking has taken longer than expected. This in turn has led to lower delivery volumes than we expected for the second quarter. Within construction, demand was especially slow in commercial and industrial construction. Weak earnings performance was mainly attributable to lower sales volumes and the low steel production capacity utilization rate. The low capacity utilization rate in steel production had a negative cost impact of around EUR 160 million. Profitability was additionally burdened by lower selling prices. We started up the idle blast furnace at the Raahe Works in May, but this still did not yet significantly reduce the cost per unit of steel produced during the second quarter."
He added that "There are signs that the market will pick up towards the end of the year in some of our customer segments as a result of falling stock levels. Based on efficiency improvement actions and adjustment measures under way, lower costs of raw materials used in steel production and improved cost efficiency in steel production, the company estimates 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."
