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EANS-Adhoc RHI AG / Provision resulting from the valuation of a long-term energy supply contract has a negative effect on earnings in 2015 and leads to improvements in the following years - dividend remains unchanged

Nachrichtenagentur: news aktuell
12.02.2016, 21:16  |  881   |   |   
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ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
distribution. The issuer is solely responsible for the content of this
announcement.
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annual result
12.02.2016

Current incidents at the site in Porsgrunn, Norway, are forcing the
Management to make a more conservative estimate regarding future
production volumes. In addition, the grade concept for finished
products provides for an increased use of external raw materials as a
result of the significant drop in raw material prices. This has the
following effects on the financial statements of 2015: as the
so-called "own-use exemption" no longer applies, the long-term energy
supply contract concluded in 2011 has to be qualified as a financial
instrument in accordance with IAS 39. The valuation of the complete
term of the contract until the end of the year 2023 at market price
level leads to a non-cash provision of roughly EUR 58 million at the
end of the year 2015. In the following years, this provision will be
reversed and will lead to the corresponding improvements in earnings.

Business Development The RHI Group's revenue amounted to EUR 1,752.5
million in the past financial year, after EUR 1,721.2 million in the
year 2014. The decline in revenue in the Steel Division in Europe,
the Middle East and North Africa was nearly compensated by a good
business development in India and South America as well as positive
currency translation effects resulting from the devaluation of the
euro against the US dollar. In the Industrial Division, the
year-on-year increase in revenue by 8.5% is, among other things,
attributable to higher project deliveries in the glass and
environment, energy, chemicals business units. At the same time, the
cement/lime business unit benefited from a positive development of
the construction sector in North America.

The operating EBIT decreased from EUR 141.9 million in the previous
year to EUR 124.1 million in the financial year 2015. While the
operating EBIT of the Steel Division declined due to a weaker margin
development in Europe and the Middle East as well as negative product
mix effects resulting from decreasing volumes in the electric arc
furnace segment, the Industrial Division benefited from better
utilization of fixed costs following an increase in revenue, improved
margins in the glass business unit and several major repairs carried
out in the nonferrous metals business unit. The Raw Materials
Division's lower contribution to earnings is attributable to weaker
capacity utilization at the raw material plants resulting from
declining volumes in the electric arc furnace segment. In addition,
the operating EBIT was affected by negative currency translation
effects of EUR 8.9 million from the measurement of balance sheet
items, which are recognized under other expenses.

EBIT amounted to EUR 37.5 million in the past financial year and
includes a full write-down of the plant in Porsgrunn, Norway,
amounting to roughly EUR 23 million and the plant in Falconer, US,
amounting to roughly EUR 8 million as well as negative effects on
earnings of roughly EUR 58 million related to the change in valuation
of a long-term energy supply contract concluded in the year 2011. In
addition, a provision totaling roughly EUR 3 million was formed for
the closure of the plant in Clydebank, Scotland. This is contrasted
by positive effects of roughly EUR 6 million from the reversal of
provisions after the sale of the premises at the site in Duisburg,
Germany, as well as lower closure costs at the Kretz site, Germany.

Profit after income tax thus amounted to EUR 17.6 million in the
financial year 2015 after EUR 52.5 million in the previous year.
Earnings per share declined from EUR 1.28 to EUR 0.40.

Financial and Asset Position Net cash flow from operating activities
increased from EUR 72.4 million in the previous year to EUR 175.4
million in the past financial year. This development is, among other
things, due to the reduction of working capital by EUR 38.3 million
compared with the level at the end of the year 2014. Net cash flow
from investing activities amounted to EUR (47.2) million in the past
financial year and included payments related to the sale of
securities due to surplus coverage of the legally required provisions
for pensions of two companies amounting to roughly EUR 11 million as
well as payments from the sale of a 2.6% share in a German
residential property company amounting to roughly EUR 3 million. Free
cash flow, defined as the total of net cash flow from operating
activities and net cash flow from investing activities, rose from EUR
11.3 million in the year 2014 to EUR 128.2 million in the year 2015
among other things because of the reduction of working capital. The
balance sheet total of the RHI Group decreased from EUR 1,860.5
million at the end of 2014 to EUR 1,804.5 million at the end of 2015,
primarily because of the reduction of working capital and lower
financial liabilities. The RHI Group's equity amounted to EUR 491.4
million at December 31, 2015 after EUR 493.9 million in the previous
year. The equity ratio improved from 26.5% to 27.2% in the year 2015.
The consolidated statement of financial position at December 31, 2015
shows net debt of EUR 397.9 million (previous year: EUR 466.9
million).

Steel Division Sales volume of the Steel Division declined by 7.5%,
from roughly 1,246,000 tons in the previous year to roughly 1,152,000
tons in the past financial year. This is primarily attributable to
weaker linings business in the electric arc furnace and ladle
segments. Revenue declined by 0.8%, from EUR 1,108.8 million in the
previous year to EUR 1,099.9 million. The decrease in revenue in
Europe, the Middle East and North Africa was compensated by a good
business development in India and South America as well as positive
currency translation effects resulting from the devaluation of the
euro against the US dollar. The operating EBIT dropped from EUR 93.1
million in the previous year to EUR 64.3 million in the past
financial year due to lower utilization of the production capacities
and negative product mix effects.

Industrial Division Sales volume of the Industrial Division amounted
to 443,000 tons in the financial year 2015, thus remaining largely
constant compared to the prior-year level of roughly 440,000 tons.
Revenue rose by 8.5%, from EUR 566.6 million in the previous year to
EUR 614.6 million. One of the reasons is a major contract in the
environment, energy, chemicals business unit in the petroleum coke
gasifier segment in India. In addition, several major repairs
postponed by customers in the previous year were carried out in the
glass and nonferrous metals business units. Moreover, the cement/lime
business unit benefited from a positive development of the
construction sector in North America. As a result of higher revenue
and better margins in the nonferrous metals business unit as well as
savings realized in the glass business unit, the operating EBIT
increased from EUR 48.6 million in the year 2014 to EUR 65.0 million
in the past financial year.

Raw Materials Division External sales volume of the Raw Materials
Division increased significantly from roughly 182,000 tons in the
previous year to roughly 297,000 tons in the past financial year. The
increase by 63.2% is primarily attributable to the sale of raw
dolomite. While these sales contribute a large share to volume, the
effect in terms of value is small as the sales prices per ton are
low. Revenue decreased by 10.1% from EUR 303.3 million in the
previous year to EUR 272.6 million in 2015. This is due to both lower
internal demand by the Steel Division, especially in the area of
basic mixes, and to a decline in external demand resulting from the
insolvency of a customer in Italy. The reduced demand by the Steel
Division results from a decline in sales volume in the electric arc
furnace segment by roughly 12%. In this product segment RHI has its
own raw materials, which are mined at the Austrian sites in Breitenau
and Hochfilzen. Consequently, the decline in sales volume also led to
poor utilization of the raw material plants. The operating EBIT
dropped from EUR 0.2 million to EUR (5.2) million in the past
financial year due to the weak capacity utilization.

Outlook In its forecast published in January 2016, the International
Monetary Fund expects global economic growth of 3.4% in the current
year after 3.1% in the year 2015. Three key factors influence this
outlook: slower economic growth in China as a result of the
reorientation of the economy - with the objective of strengthening
domestic consumption and reducing dependence on foreign investments
and exports -, lower energy and raw material prices as well as a
gradual tightening of the monetary policy in the US. According to a
study of early December 2015, the research institute CRU expects a
decline in steel production in China by roughly 1% for the year 2016
and an increase in steel production by roughly 2% outside China.
Based on these assumptions, RHI expects revenue (2015: EUR 1,752.5
million) below and an operating EBIT (2015: EUR 124.1 million) at the
level of the past financial year, with the first half of 2016
slightly weaker than the second half of the year. The expected
decline in revenue in the Steel Division is related especially to an
expected slowdown of the business development in South America and a
highly competitive environment. In the Industrial Division, weaker
nonferrous metals business could cause a decrease in revenue. Due to
the development in the customer industries, RHI is currently working
on further optimizing the plant structure, which could lead to an
adjustment of production capacities in Europe in the current
financial year. In addition, different cost measures have been
defined in the sales and general administrative departments. The
planned continuation of the reduction of working capital should
support the generation of free cash flow and lead to a further
reduction of net debt. The Management Board of RHI AG intends to
propose again a stable dividend of EUR 0.75 per share to the Annual
General Meeting on May 4, 2016.

Preliminary Unaudited Key Figures 2015

2015 2014 Delta 4Q/15 4Q/14 Delta
Sales volume (thousand
tons) 1,892 1,868 1.3% 488 502 (2.8)%
Steel Division 1,152 1,246 (7.5)% 269 311 (13.5)%
Industrial Division 443 440 0.7% 136 132 3.0%
Raw Materials Division 297 182 63.2% 83 59 40.7%

in EUR million
Revenues 1,752.5 1,721.2 1.8% 440.0 466.5 (5.7)%
Steel Division 1,099.9 1,108.8 (0.8)% 257.8 293.6 (12.2)%
Industrial Division 614.6 566.6 8.5% 171.2 162.7 5.2%
Raw Materials Division
External revenues 38.0 45.8 (17.0)% 11.0 10.2 7.8%
Internal revenues 234.6 257.5 (8.9)% 49.9 62.6 (20.3)%
EBITDA 140.0 199.4 (29.8)% (2.3) 51.8 (104.4)%
EBITDA margin 8.0% 11.6% (3.6)pp (0.5)% 11.1% (11.6)pp
Operating EBIT 1) 124.1 141.9 (12.5)% 32.7 41.8 (21.8)%
Steel Division 64.3 93.1 (30.9)% 13.6 27.9 (51.3)%
Industrial Division 65.0 48.6 33.7% 24.3 18.2 33.5%
Raw Materials Division (5.2) 0.2 (2,700.0)% (5.2) (4.3) (20.9)%
Operating EBIT margin 7.1% 8.2% (1.1)pp 7.4% 9.0% (1.6)pp
Steel Division 5.8% 8.4% (2.6)pp 5.3% 9.5% (4.2)pp
Industrial Division 10.6% 8.6% 2.0pp 14.2% 11.2% 3.0pp
Raw Materials
Division 2) (1.9)% 0.1% (2.0)pp (8.5)% (5.9)% (2.6)pp
EBIT 37.5 109.3 (65.7)% (53.9) 11.9 (552.9)%
Steel Division 63.4 91.4 (30.6)% 12.7 27.7 (54.2)%
Industrial Division 58.9 34.9 68.8% 18.2 5.7 219.3%
Raw Materials Division (84.8) (17.0) (398.8)% (84.8) (21.5) (294.4)%
EBIT margin 2.1% 6.4% (4.3)pp (12.3)% 2.6% (14.9)pp
Steel Division 5.8% 8.2% (2.4)pp 4.9% 9.4% (4.5)pp
Industrial Division 9.6% 6.2% 3.4pp 10.6% 3.5% 7.1pp
Raw Materials
Division 2) (31.1)% (5.6)% (25.5)pp (139.2)% (29.5)% (109.7)pp
Net finance costs (19.3) (32.7) 41.0% (3.3) (10.3) 68.0%
Share of profit of
joint ventures 9.2 8.2 12.2% 2.5 2.5 0.0%
Profit before income
tax 27.4 84.8 (67.7)% (54.7) 4.1 (1,434.1)%
Income taxes (9.8) (32.3) (69.7)% 16.3 (3.2) (609.4)%
Income taxes in % 35.8% 38.1% (2.3)pp 29.8% 78.0% (48.2)pp
Profit for the year 17.6 52.5 (66.5)% (38.4) 0.9 (4,366.7)%

Earnings per share in
EUR 3) 0.40 1.28 (0.98) 0.01

1) EBIT before losses of derivatives from supply contracts,
impairment losses and restructuring effects 2) based on internal and
external revenues 3) basic and diluted

Preliminary unaudited key figures (in EUR million) 2015 2014 Delta
Balance sheet total 1,804.5 1,860.5 (3.0)%
Equity 491.4 493.9 (0.5)%
Equity ratio (in %) 27.2% 26.5% 0.7pp
Investments in PP&E and intangible assets 80.8 76.2 6.0%
Net debt 397.9 466.9 (14.8)%
Gearing ratio (in %) 81.0% 94.5% (13.5)pp
Net debt / EBITDA 2.8 2.3 0.5
Working capital 532.6 570.9 (6.7)%
Working capital (in %) 30.4% 33.2% (2.8)pp
Capital employed 1,176.5 1,225.3 (4.0)%
Return on average capital employed (in %) 2.3% 6.5% (4.2)pp
Net cash flow from operating activities 175.4 72.4 142.3%
Net cash flow from investing activities (47.2) (61.1) (22.7)%
Net cash flow from financing activities (124.4) 24.6 (605.7)%


Gearing ratio: net debt / equity

Working Capital: Inventories + Trade receivables and receivables from
long-term construction contracts - Trade payables - Prepayments
received Capital Employed: Property, plant and equipment + Goodwill +
Other intangible assets + Working Capital Return on average capital
employed: (EBIT - Taxes) / average Capital Employed

Further inquiry note:
RHI AG

Investor Relations

Mag. Simon Kuchelbacher

Tel: +43-1-50213-6676

Email: simon.kuchelbacher@rhi-ag.com

end of announcement euro adhoc
--------------------------------------------------------------------------------

issuer: RHI AG
Wienerbergstrasse 9
A-1100 Wien
phone: +43 (0)50213-6676
FAX: +43 (0)50213-6130
mail: rhi@rhi-ag.com
WWW: http://www.rhi-ag.com
sector: Refractories
ISIN: AT0000676903
indexes: ATX Prime, ATX
stockmarkets: official market: Wien
language: English


Wertpapier: RHI

Themen: Cap, EUR, Capital


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EANS-Adhoc RHI AG / Provision resulting from the valuation of a long-term energy supply contract has a negative effect on earnings in 2015 and leads to improvements in the following years - dividend remains unchanged

- ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide distribution. The issuer is solely responsible for the content of this announcement. - annual result 12.02.2016 Current incidents at the site in Porsgrunn, Norway, are …

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