Interim / Quarterly Report • Jun 30, 2012
Interim / Quarterly Report
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07:00 London, 09:00 Helsinki, 16 August 2012 - Ruukki Group Plc ("Ruukki" or "the Company") (LSE: RKKI, OMX: RUG1V) Interim Report
| KEY FIGURES (EUR million) | Q2/12 | Q2/11 | Change | H1/12 | H1/11 | Change | FY/11 |
|---|---|---|---|---|---|---|---|
| Revenue | 31.3 | 44.5 | -29.7% | 78.0 | 79.3 | -1.6% | 159.1 |
| EBITDA | 3.9 | 1.7 | 132.7% | 6.7 | 5.1 | 30.4% | 1.4 |
| EBITDA margin | 12.5% | 3.8% | 8.6% | 6.5% | 0.9% | ||
| EBIT | -2.6 | -5.4 | -6.8 | -9.0 | -26.5 | ||
| EBIT margin | -8.4% | -12.1% | -8.7% | -11.3% | -16.6% | ||
| Earnings before taxes | -2.5 | -5.9 | -5.1 | -9.8 | -25.4 | ||
| Earnings margin | -8.1% | -13.2% | -6.5% | -12.3% | -16.0% | ||
| Profit for continuing operations | -2.3 | -3.9 | -4.3 | -7.0 | -18.4 | ||
| Profit for discontinued operations | 0.0 | 4.1 | -100.0% | 0.0 | 47.1 | -100.0% | 41.1 |
| Profit | -2.3 | 0.3 | -4.3 | 40.1 | 22.7 | ||
| Earnings per share, basic, EUR | -0.01 | 0.00 | -0.01 | 0.17 | 0.10 |
Continuing operations include the Speciality Alloys and the FerroAlloys business segments and unallocated items that consist of Group headquarters and other Group companies, which do not have significant business operations. Discontinued operations include the house building, pallet and sawmill businesses which were divested in 2011.
"I am pleased to report an improved underlying financial performance by the Group for the second quarter and the first half of 2012 despite the ongoing difficult market conditions. The Group's increased focus on niche, higher margin speciality alloy products is starting to show results. Ruukki is weathering the very challenging market conditions well and this demonstrates the robustness of our business model, placing us in a strong position for when the markets begin to recover.
We were cash flow positive at the operating level and posted a strong increase in EBITDA in spite of the decrease in revenue and realised sales prices remaining similar quarter on quarter and year on year. The main contributors for the better profitability were improved cost efficiency and favourable exchange rates. Group production was lower due to bad weather conditions in Turkey and our participation in the Eskom electricity buyback programme in South Africa, which saw the majority of the furnaces at Mogale suspend production for most of second quarter. This programme has now finished and the restart of furnaces has commenced.
Looking ahead we expect to improve our full year financial performance as we anticipate market conditions to remain relatively stable. We continue to monitor market conditions closely and are prepared to adjust our production levels and product mix accordingly. In addition to seasonal market slowdown during European summer our production volumes for Q3 will be impacted by the annual maintenance shutdowns at our processing facilities in South Africa and Germany.
We remain focused on growth as we believe the long-term fundamentals for the business are attractive. The recent acquisition of EWW provided us with a strong position as one of the leading producers of speciality
alloy products used by various industries. Our growth initiatives are targeted to further strengthen the company's position in this high value add niche market."
The global economic outlook for 2012 is uncertain as the Eurozone crisis continues and demand for commodities, primarily driven by Chinese consumption, remains weak. After a period of very high fluctuations on the ferroalloy market it is now expected to be less volatile going forward. The Group remains prepared for price fluctuations and will continue to adapt its production levels and product mix accordingly. The market for speciality alloy products is estimated to be more stable, although some uncertainty remains.
The Board has updated the outlook for the Company's financial performance for 2012. Ruukki expects its revenue for the full year 2012 to be in line with 2011 and the Company's financial performance for the full year 2012 to be better than 2011 because of more stable market conditions, improved cost efficiency across the operations, and favourable exchange rates. Due to the seasonal nature of the business, the Company's performance for Q3 2012 is not expected to be as positive as Q2 2012.
Fluctuations of exchange rates between the Euro, the South African Rand, the Turkish Lira and the US Dollar can significantly impact the Company's financial performance.
The previous outlook, published in the first quarter interim results on 10 May 2012, was:
The global economic outlook for 2012 is uncertain as the Eurozone crisis continues and demand for commodities, primarily driven by Chinese consumption, remains weak. The ferroalloy market is expected to continue to be volatile during the year. The Group is preparing for significant price fluctuations and will continue to adapt its productions levels accordingly. At Mogale, part of the FerroAlloys division, the decision has been taken to put majority of furnaces on care and maintenance for the first half of the year. This decision will be reviewed during the second quarter. The market for speciality alloy products is estimated to be more stable, however, uncertainty remains in 2012 too. In light of this and until the market for its products improve, the Group expects its financial performance for the full year 2012 to be comparable to 2011.
Fluctuations of exchange rates between the Euro, the South African Rand, the Turkish Lira and the US Dollar can significantly impact the Company's financial performance.
Ruukki follows the disclosure procedure enabled by Standard 5.2b published by the Finnish Financial Supervision Authority, and hereby publishes its Q2 Interim Report enclosed to this stock exchange release. The Q2 Interim Report is attached to this release and is also available on the Company's website at www.ruukkigroup.com.
Management will host an investor conference call in English on 16 August 2012 at 12.00 Finnish time, 10.00 UK time. Please dial-in at least 10 minutes beforehand, quoting the reference: 921212.
Finnish number +358 (0)9 2313 9201
UK number +44 (0)20 7162 0077
RUUKKI GROUP PLC Thomas Hoyer CEO
For additional information, please contact:
Thomas Hoyer, CEO, +358 (0)10 440 7000, [email protected] Kalle Lehtonen, General Manager: Finance, +358 (0)400 539 968, [email protected] Markus Kivimäki, General Manager: Corporate Affairs, +358 (0)50 3495 687, [email protected]
Investec Bank Plc Stephen Cooper, +44 (0)20 7597 5104, [email protected]
Martin Eales, +44 (0)20 7653 4000, [email protected] Peter Barrett-Lennard, +44 (0)20 7653 4000, [email protected]
Financial reports and other investor information are available on the Company's website: www.ruukkigroup.com
Ruukki Group is a chrome mining and minerals producer focused on delivering sustainable growth with a speciality alloys business in southern Europe and a ferro alloys business in southern Africa. The Company is listed on NASDAQ OMX Helsinki (RUG1V) and the Main Market of the London Stock Exchange (RKKI). www.ruukkigroup.com
Distribution: NASDAQ OMX Helsinki London Stock Exchange main media www.ruukkigroup.com
This Interim Report is prepared in accordance with the IAS 34 standard and is unaudited. All the figures in this Interim Report related to the house building, pallet and sawmill businesses are categorised as discontinued operations. All the corresponding comparable figures of 2011 are presented in brackets, unless otherwise explicitly stated.
The Group's sales from processing, which includes all the products produced at the Mogale Alloys and EWW processing plants, were 12,767 (Q2/2011: 31,148) tonnes, a decrease of 59.0% compared to the equivalent period in 2011. The decrease was predominantly attributable to the decision taken in Q1 2012 to accept Eskom's electricity buyback programme and shutdown the majority of the furnaces at Mogale in South Africa and to produce only Plasma Ferrochrome for selected customers. Demand for Speciality Alloys products remained good in the review period and sales increased by 15.0% compared to equivalent period in 2011.
Sales from processing:
| Tonnes | Q2/12 | Q2/11 | H1/12 | H1/11 | FY/11 |
|---|---|---|---|---|---|
| Processing, Speciality Alloys | 8,143 | 7,082 | 17,725 | 12,722 | 24,292 |
| Processing, FerroAlloys | 4,624 | 24,066 | 27,856 | 47,139 | 82,663 |
| Processing, Total | 12,767 | 31,148 | 45,581 | 59,862 | 106,955 |
Reviewing the global ferrochrome market for the quarter, a few key observations can be made: Ferrochrome prices during the quarter were impacted by negative sentiment surrounding Europe and declining demand. For most of the quarter, South African ferrochrome production was suspended due to the Eskom electricity buyback programme. Chinese ferrochrome producers compensated for this by increasing their capacity to cover the supply shortage from South Africa, thereby negating any predicted supply demand imbalance. The buyback programme finished at the end of May however significant part of South African capacity is still closed.
China continued to increase chrome ore imports quarter on quarter, taking advantage of the low chrome ore prices, although imports were down by 13% on a year on year comparison. China still remains on track to overtake South Africa as the largest ferrochrome producer.
In contrast, in the speciality alloy sector, although prices for Low Carbon ferrochrome were impacted by destocking ahead of the European summer, underlying demand remained reasonably robust.
Silico Manganese alloy prices also came under pressure during the quarter amid seasonally weaker steel production and adequate supply in the market.
| EUR million | Q2/12 | Q2/11 | Change | H1/12 | H1/11 | Change | FY/11 |
|---|---|---|---|---|---|---|---|
| Revenue | 31.3 | 44.5 | -29.7% | 78.0 | 79.3 | -1.6% | 159.1 |
| EBITDA | 3.9 | 1.7 | 132.7% | 6.7 | 5.1 | 30.4% | 1.4 |
| EBITDA margin | 12.5% | 3.8% | 8.6% | 6.5% | 0.9% | ||
| EBIT | -2.6 | -5.4 | -6.8 | -9.0 | -26.5 | ||
| EBIT margin | -8.4% | -12.1% | -8.7% | -11.3% | -16.6% | ||
| Profit for discontinued operations |
0.0 | 4.1 | -100.0% | 0.0 | 47.1 | -100.0% | 41.1 |
| Profit | -2.3 | 0.3 | -4.3 | 40.1 | 22.7 |
Discontinued operations include the house building, pallet and sawmill businesses which were divested in 2011.
Revenue for the second quarter 2012 decreased by 29.7% to EUR 31.3 (44.5) million compared to the equivalent period in 2011. The decrease in revenue was mainly attributable to the decision, taken in Q1 2012, to accept Eskom's electricity buyback programme and to suspend production at Mogale. Even though revenue was down compared to equivalent period in 2011, the Eskom buyback programme compensated for the loss in profits. The buyback programme ended at the end of May 2012. EBITDA for the second quarter improved substantially compared to the equivalent period in 2011 to EUR 3.9 (1.7) million, although it was impacted by the provision of a rehabilitation contingency at the Stellite mine, in relation to the opening up a new reef.
Earnings per share was EUR -0.01 (0.00).
The Group's liquidity, as at 30 June 2012, when taking into account cash and cash equivalents as well as short-term deposits, remained healthy at EUR 45.0 (81.8) (31 March 2012: 65.1) million. Decrease in cash balance during the quarter relates to the EUR 25.3 million payment for EWW and termination of profit and loss sharing arrangement in relation to RCS and TMS. Operating cash flow in the second quarter improved substantially to EUR 13.5 (-5.8) million. Ruukki's gearing at the end of the second quarter was 11.3% (6.2%) (31 March 2012: 8.5%). Net interest-bearing debt was EUR 26.8 (15.9) (31 March 2012: 20.4) million.
Total assets on 30 June 2012 were EUR 394.0 (499.0) (31 March 2012: 420.1) million. The equity ratio was 60.3% (51.1%) (31 March 2012: 57.2%).
Capital expenditure for the second quarter of 2012 was EUR 1.2 (1.4) million and related primarily to sustaining capital expenditure at the processing plants as well as to some environmental improvements at the European processing plant.
On 18 April 2012 Ruukki announced that it has signed an agreement with Kermas Limited ("Kermas") for the acquisition of Elektrowerk-Weisweiler GmbH ("EWW"). In addition Ruukki and Kermas agreed to terminate the profit and loss sharing arrangement in relation to Türk Maadin Sirketi and RCS Limited ("RCS") and certain other arrangements which were entered into in October 2008. EWW is a critical component in Ruukki's Speciality Alloys segment and was operating under a long-term tolling agreement between EWW and RCS. Ruukki has incorporated EWW's financial statements in its consolidated financial statements since November 2008. The transactions were completed after the approval by the Company's independent shareholders at the Annual General Meeting on 10 May 2012 and a total cash consideration of EUR 25.3 million was paid.
At the end of the second quarter 2012, Ruukki had 762 (781) employees. The average number of employees during the second quarter of 2012 was 767 (777).
Number of employees by segment:
| 30.6.2012 | 30.6.2011 | Change | 31.12.2011 | |
|---|---|---|---|---|
| Speciality Alloys | 432 | 418 | 3.3% | 442 |
| FerroAlloys | 321 | 353 | -9.1% | 345 |
| Other operations | 9 | 10 | -10.0% | 10 |
| Continuing operations total | 762 | 781 | -2.4% | 797 |
The Group's target this year is to introduce standardised health, safety and environmental policies and procedures across the Group's operations and continue its programme focused on pro-active safety and environmental measurements as part of its aim to achieve "Zero Harm". This standardisation process will take the majority of the year to roll out as it will involve a specific training programme for the Group's employees and contractors.
Ruukki aims to conduct its business in a sustainable way and to preserve the environment by minimising the
environmental impact of its operations. Ruukki has programmes in place to monitor and address its impact on the environment.
The Speciality Alloys business consists of TMS, the mining and beneficiation operation in Turkey, and EWW, the chromite concentrate processing plant in Germany. TMS supplies EWW with high quality chromite concentrate which produces speciality products including Specialised Low Carbon and Ultra Low Carbon Ferrochrome. Excess chrome ore from TMS is exported. As at 30 June 2012, the business had 432 (418) employees.
| Tonnes | Q2/12 | Q2/11 | Change | H1/12 | H1/11 | Change | FY/11 |
|---|---|---|---|---|---|---|---|
| Mining* | 17,729 | 20,631 | -14.1% | 36,983 | 40,630 | -9.0% | 82,154 |
| Processing | 7,484 | 7,209 | 3.8% | 14,225 | 14,090 | 1.0% | 25,908 |
* Including both chromite concentrate and lumpy ore production
Production decreased slightly to 25,213 (27,840) tonnes for the second quarter 2012, compared to the both the Q1 2011 and the equivalent period in 2011. Mining at TMS was negatively impacted by bad weather conditions, however this did not affect EWW's operations since there were sufficient stockpiles for the processing plant to run at nearly full capacity for the quarter.
| EUR million | Q2/12 | Q2/11 | Change | H1/12 | H1/11 | Change | FY/11 |
|---|---|---|---|---|---|---|---|
| Revenue | 22.3 | 21.1 | 5.9% | 43.6 | 41.3 | 5.6% | 83.6 |
| EBITDA | 4.5 | 3.5 | 27.5% | 7.7 | 8.6 | -10.6% | 13.8 |
| EBITDA margin | 20.2% | 16.8% | 17.6% | 20.8% | 16.5% | ||
| EBIT | 0.4 | -1.0 | -0.9 | -0.3 | -3.8 | ||
| EBIT margin | 1.6 % | -4.7% | -2.1% | -0.8% | -4.6% |
Revenue for the second quarter increased by 5.9% to EUR 22.3 (21.1) million and included sales of finished stock produced during Q1 2012. EBITDA increased substantially, up 27.5% to EUR 4.5 (3.5) million due to an increase in the sales volumes and the change in the product mix of speciality alloys, Ultra Low Carbon and Low Carbon. EBIT also improved and was positive for the quarter.
The FerroAlloys business consists of the Stellite mine, the alloy processing plant Mogale, the Mecklenburg mine development project in South Africa, and the Zimbabwean mine development project Waylox. The business produces chrome ore, Charge Chrome and Silico Manganese for sale to global markets. As at 30 June 2012, the business had 321 (353) employees.
| Tonnes | Q2/12 | Q2/11 | Change | H1/12 | H1/11 | Change | FY/11 |
|---|---|---|---|---|---|---|---|
| Mining* | 38,144 | 35,669 | 6.9% | 93,377 | 67,657 | 38.0% | 159,455 |
| Processing | 10,824 | 29,340 | -63.1% | 20,762 | 58,282 | -64.4% | 86,445 |
* Including both chromite concentrate and lumpy ore production
The Stellite mine performed well during the quarter from an operational perspective and a new reef was opened up to increase mining flexibility, although production was down substantially compared to the previous quarter in response to lower chrome ore prices and an oversupply of the global chrome ore market. The significant decrease in processing volumes was directly attributable to the decision to shut down the majority of the furnaces at Mogale and sell back the excess power to Eskom. This electricity buyback programme has now stopped and production has resumed at Mogale. Overall production for the segment decreased 24.7% to 48,968 (65,009) tonnes in the second quarter.
| EUR million | Q2/12 | Q2/11 | Change | H1/12 | H1/11 | Change | FY/11 |
|---|---|---|---|---|---|---|---|
| Revenue | 9.0 | 23.5 | -61.8% | 34.5 | 38.1 | -9.5% | 75.4 |
| EBITDA | 1.3 | 0.1 | 1 938.0% | 2.7 | 0.1 | 2 291.9% | -3.9 |
| EBITDA margin | 14.4% | 0.3% | 7.7% | 0.3% | -5.2% | ||
| EBIT | -1.1 | -2.5 | -2.2 | -5.0 | -14.0 | ||
| EBIT margin | -12.2% | -10.5% | -6.3% | -13.2% | -18.6% |
Revenue for the second quarter decreased to EUR 9.0 (23.5) million compared to the equivalent period in 2011, representing a decrease of 61.8%, due to the weak chrome ore market and Company's decision to participate into Eskom's electricity buyback program in South Africa. Although revenue decreased significantly compared to equivalent period in 2011, the buyback programme with Eskom compensated for the loss in profits. EBITDA was also impacted by the provision of a rehabilitation contingency relating to the opening up a new reef at Stellite.
For the second quarter of 2012, the EBITDA from unallocated items was EUR -1.9 (-2.1) million including a EUR 0.2 (0.2) million non-cash expense for the share-based payments.
As disclosed previously Ruukki and Rautaruukki Plc have a number of on-going litigation processes in relation to the right to use the Ruukki name. One of the processes dealt with the validity of Rautaruukki's trademarks in Finland. The district court of Helsinki rendered a ruling during Q2 according to which the trademarks are valid. Ruukki has decided to appeal the ruling and the matter will next be handled at the court of appeal.
Ruukki's Annual General Meeting ("AGM") was held on 10 May 2012. All the AGM resolutions were published in a stock exchange release on 10 May 2012 and are available on Ruukki's website, www.ruukkigroup.com.
The AGM adopted the financial statements and the group financial statements and discharged the members of the Board of Directors and the CEO from liability for the financial period 2011. The AGM resolved that no dividend is paid for 2011.
The AGM resolved that there are eight (8) members on the Board of Directors. Philip Baum, Paul Everard, Markku Kankaala, Danko Koncar, Jelena Manojlovic, Chris Pointon, Barry Rourke and CEO Thomas Hoyer were re-elected to the Board. The Board of Directors appointed Jelena Manojlovic as Chairman and Chris Pointon as Deputy Chairman and elected the chairmen and members of the Audit Committee, Nomination Committee, Remuneration Committee and the Safety, Health and Sustainable Development Committee.
The AGM approved the Board of Directors and the board committees' remuneration as proposed by the Nomination Committee. Following the recommendation by the Audit committee the Authorised Public Accountant Firm Ernst & Young Oy was re-elected as the Auditor of the Company.
The AGM accepted the proposal by the Board of Directors that the arrangements, as detailed in the circular published on 18 April 2012 (the "Circular") between the company and Kermas Limited, relating to the proposed Transaction (each as defined in the Circular) were approved.
The AGM resolved the Board of Directors to decide on the share issue and on the issuing of stock options and other special rights that entitle to shares. By virtue of the authorisation, shares can be emitted in one or more tranches in total a maximum of 24,843,200 new shares or shares owned by the company. The authorisation may be used, among other things, for financing purposes, enabling corporate and business acquisitions or other arrangements, investments or in the incentive programmes for personnel.
The AGM authorised the Board of Directors to decide upon acquiring a maximum of 15,000,000 of the company's own shares. The authorisation replaces all previous authorisations and is valid 18 months from the decision of the Annual General Meeting.
Ruukki Group Plc's shares are listed on NASDAQ OMX Helsinki (RUG1V) and on the Main Market of the London Stock Exchange (RKKI).
On 30 June 2012, the registered number of Ruukki Group Plc shares was 248,432,000 (248,207,000) and the share capital was EUR 23,642,049.60 (23,642,049.60).
On 30 June 2012, the Company had 4,414,682 (7,790,895) own shares in treasury, which was equivalent to 1.78% (3.14%) of the issued share capital. The total amount of shares outstanding, excluding the treasury shares held by the Company on 30 June 2012, was 244,017,318 (240,416,105).
At the beginning of the period under review, the Company's share price was EUR 0.89 on NASDAQ OMX Helsinki and GBP 0.88 on the London Stock Exchange. At the end of the review period, the share price was EUR 0.66 and GBP 0.54 respectively. During the second quarter of 2012 the Company's share price on NASDAQ OMX Helsinki ranged from EUR 0.63 to 0.90 per share and the market capitalisation, as at 30 June 2012, was EUR 164.0 (1 Jan 2012: 221.1) million. For the same period on the London Stock Exchange the share price range was GBP 0.54 to 0.73 per share and the market capitalisation was GBP 134.2 (1 Jan 2012: 218.6) million, as at 30 June 2012.
Based on the resolution at the AGM on 10 May 2012, the Board is authorised to buy-back up to a maximum of 15,000,000 of its own shares. This authorisation is valid until 10 November 2013. The Company did not carry out any share buy-backs during the first half of 2012.
On 19 July 2012 Ruukki received a notification that Philip Baum, Non-executive Director, has sold 150,000 ordinary shares in the Company at the price of GBP 0.55 per share on 12 July 2012. The trades were made on the London Stock Exchange. Accordingly, Philip Baum holds now no shares in Ruukki Group Plc.
The changes in the key risks and uncertainties are set out below. Further details of the risks and uncertainties have been published in the Group's 2011 Annual Report.
Ruukki´s financial performance is dependent on the general market conditions of the mining, smelting and minerals processing business. Global financial markets have been very volatile, exacerbated by the Eurozone crisis, and there is uncertainty as to how commodity prices will respond in 2012 and which could considerably impact the Company's revenue and financial performance in 2012.
Changes in foreign exchange rates, if adverse, could have a substantial negative impact on the Group's profitability, in particular changes in US Dollar/South African Rand. Changes in the South African Rand exchange rate could also have an effect on the Euro value of the deferred purchase consideration of Mogale Alloys. In order to better manage its foreign exchange US Dollar/South African Rand exposure, the Group has entered into forward contract arrangements.
Ruukki's processing operations in Germany and South Africa are intensive users of energy, primarily electricity. Fuel and energy prices globally have been characterised by volatility and cost inflation. In South Africa the majority of the electricity supply, price and availability are controlled by one entity, Eskom. Increased electricity prices and/or reduced or uncertain electricity supply or allocation may negatively impact Ruukki's current operations, which could have an impact on the Group's financial performance.
The global economic outlook for 2012 is uncertain as the Eurozone crisis continues and demand for commodities, primarily driven by Chinese consumption, remains weak. After a period of very high fluctuations on the ferroalloy market it is now expected to be less volatile going forward. The Group remains prepared for price fluctuations and will continue to adapt its production levels and product mix accordingly. The market for speciality alloy products is estimated to be more stable, although some uncertainty remains.
The Board has updated the outlook for the Company's financial performance for 2012. Ruukki expects its revenue for the full year 2012 to be in line with 2011 and the Company's financial performance for the full year 2012 to be better than 2011 because of more stable market conditions, improved cost efficiency across the operations, and favourable exchange rates. Due to the seasonal nature of the business, the Company's performance for Q3 2012 is not expected to be as positive as Q2 2012.
Fluctuations of exchange rates between the Euro, the South African Rand, the Turkish Lira and the US Dollar can significantly impact the Company's financial performance.
The previous outlook, published in the first quarter interim results on 10 May 2012, was:
The global economic outlook for 2012 is uncertain as the Eurozone crisis continues and demand for commodities, primarily driven by Chinese consumption, remains weak. The ferroalloy market is expected to continue to be volatile during the year. The Group is preparing for significant price fluctuations and will continue to adapt its productions levels accordingly. At Mogale, part of the FerroAlloys division, the decision has been taken to put majority of furnaces on care and maintenance for the first half of the year. This decision will be reviewed during the second quarter. The market for speciality alloy products is estimated to be more stable, however, uncertainty remains in 2012 too. In light of this and until the market for its products improve, the Group expects its financial performance for the full year 2012 to be comparable to 2011.
Fluctuations of exchange rates between the Euro, the South African Rand, the Turkish Lira and the US Dollar can significantly impact the Company's financial performance.
| Closed period | Date | |
|---|---|---|
| Q3 Interim Report 2012 | 8.10.-7.11.2012 | 7 November 2012 |
| H1/12 6 months EUR '000 |
Speciality Alloys |
Ferro Alloys |
Unallocated items |
Eliminations | Continuing operations total |
|---|---|---|---|---|---|
| Revenue | 43,552 | 34,476 | 419 | -400 | 78,046 |
| EBITDA | 7,673 | 2,668 | -3,647 | 1 | 6,695 |
| EBIT | -911 | -2,178 | -3,667 | 1 | -6,757 |
| Segment's assets | 169,886 | 211,392 | 25,366 | -12,620 | 394,024 |
| Segment's liabilities | 47,946 | 113,833 | 6,404 | -11,438 | 156,745 |
| H1/11 | Speciality | Ferro | Unallocated | Eliminations | Continuing |
| 6 months | Alloys | Alloys | items | operations | |
| EUR '000 | total | ||||
| Revenue | 41,250 | 38,086 | 348 | -348 | 79,337 |
| EBITDA | 8,586 | 112 | -3,778 | 215 | 5,136 |
| EBIT | -328 | -5,038 | -3,805 | 215 | -8,956 |
| Segment's assets | 199,353 | 234,038 | 77,220 | -18,865 | 491,746 |
| Segment's liabilities | 76,280 | 132,875 | 54,078 | -19,351 | 243,882 |
| FY/11 | Speciality | Ferro | Unallocated | Eliminations | Continuing |
|---|---|---|---|---|---|
| 12 months | Alloys | Alloys | items | operations | |
| EUR '000 | total | ||||
| Revenue | 83,637 | 75,448 | 698 | -696 | 159,087 |
| EBITDA | 13,811 | -3,886 | -8,529 | 7 | 1,404 |
| EBIT | -3,837 | -14,038 | -8,596 | 7 | -26,464 |
| Segment's assets | 171,511 | 219,205 | 49,226 | -18,135 | 421,807 |
| Segment's liabilities | 56,168 | 116,760 | 25,501 | -16,779 | 181,649 |
| EUR '000 | Q2/12 | Q2/11 | H1/12 | H1/11 | FY/11 |
|---|---|---|---|---|---|
| Continuing operations | |||||
| Revenue | 31,307 | 44,538 | 78,046 | 79,337 | 159,087 |
| Other operating income | 5,082 | 295 | 8,818 | 635 | 1,173 |
| Operating expenses | -32,485 | -43,140 | -80,175 | -75,042 | -159,128 |
| Depreciation and amortisation | -6,539 | -7,069 | -13,451 | -14,092 | -27,853 |
| Impairment | 0 | 0 | 0 | 0 | -15 |
| Items related to associates (core) | 2 | -15 | 5 | 206 | 272 |
| Operating profit | -2,633 | -5,390 | -6,757 | -8,956 | -26,464 |
| Financial income and expense | 111 | -494 | 1,660 | -1,015 | 830 |
| Items related to associates (non-core) | 0 | 0 | 0 | 196 | 196 |
| Profit before tax | -2,523 | -5,884 | -5,096 | -9,775 | -25,439 |
| Income tax | 254 | 2,015 | 758 | 2,795 | 7,081 |
| Profit for the period from continuing | |||||
| operations | -2,269 | -3,869 | -4,338 | -6,980 | -18,358 |
| Discontinued operations | |||||
| Profit for the period from | |||||
| discontinued operations | 0 | 4,137 | 0 | 47,124 | 41,086 |
| Profit for the period | -2,269 | 268 | -4,338 | 40,144 | 22,729 |
| Profit attributable to: | |||||
| Owners of the parent | -1,554 | 170 | -3,345 | 39,902 | 23,664 |
| Non-controlling interests | -715 | 97 | -993 | 241 | -935 |
| Total | -2,269 | 268 | -4,338 | 40,144 | 22,729 |
| basic (EUR), Group total | -0.01 | 0.00 | -0.01 | 0.17 | 0.10 |
| diluted (EUR), Group total | -0.01 | 0.00 | -0.01 | 0.15 | 0.09 |
| basic (EUR), continuing operations | -0.01 | -0.02 | -0.01 | -0.03 | -0.07 |
| diluted (EUR), continuing operations | -0.01 | -0.02 | -0.01 | -0.03 | -0.07 |
| EUR '000 | Q2/12 | Q2/11 | H1/12 | H1/11 | FY/11 |
|---|---|---|---|---|---|
| Profit for the period | -2,269 | 268 | -4,338 | 40,144 | 22,729 |
| Other comprehensive income | |||||
|---|---|---|---|---|---|
| Exchange differences on | |||||
| translating foreign operations | -1,964 | -1,899 | 549 | -10,518 | -13,785 |
| Income tax relating to other | |||||
| comprehensive income | 1,152 | 378 | 361 | 5,436 | 6,640 |
| Other comprehensive income, net of tax | -812 | -1,521 | 911 | -5,082 | -7,145 |
| Total comprehensive income for the period | -3,081 | -1,253 | -3,428 | 35,062 | 15,583 |
| Total comprehensive income attributable to: | |||||
| Owners of the parent | -2,217 | -1,074 | -2,571 | 36,283 | 18,738 |
| Non-controlling interests | -864 | -179 | -857 | -1,221 | -3,154 |
| EUR '000 | 30.6.2012 | 30.6.2011 | 31.12.2011 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Investments and intangible assets | |||
| Goodwill | 102,365 | 122,673 | 96,269 |
| Investments in associates | 77 | 65 | 77 |
| Other intangible assets | 56,960 | 77,617 | 65,215 |
| Investments and intangible assets total | 159,401 | 200,355 | 161,561 |
| Property, plant and equipment | 72,691 | 77,827 | 71,902 |
| Other non-current assets | 44,120 | 44,991 | 47,840 |
| Non-current assets total | 276,212 | 323,173 | 281,303 |
| Current assets | |||
| Inventories | 41,112 | 51,406 | 44,011 |
| Receivables | 31,733 | 35,349 | 30,616 |
| Cash and cash equivalents | 44,968 | 21,817 | 65,878 |
| Bank deposits | 0 | 60,000 | 0 |
| Liquid funds total | 44,968 | 81,817 | 65,878 |
| Current assets total | 117,812 | 168,573 | 140,504 |
| Assets held for sale | 0 | 7,239 | 0 |
| Assets held for sale total | 0 | 7,239 | 0 |
| Total assets | 394,024 | 498,985 | 421,807 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to owners of the parent | |||
| Share capital | 23,642 | 23,642 | 23,642 |
| Share premium reserve | 25,740 | 25,740 | 25,740 |
| Paid-up unrestricted equity reserve | 245,128 | 241,318 | 245,128 |
| Translation reserves | 9,770 | 10,302 | 8,995 |
| Retained earnings | -77,847 | -62,197 | -77,695 |
| Equity attributable to owners of the parent | 226,432 | 238,805 | 225,811 |
| Non-controlling interests | 10,847 | 16,298 | 14,348 |
| Total equity | 237,280 | 255,103 | 240,158 |
| Liabilities |
| Non-current liabilities | 128,556 | 197,205 | 150,326 |
|---|---|---|---|
| Current liabilities | |||
| Advances received | 363 | 0 | 550 |
| Other current liabilities | 27,826 | 46,677 | 30,773 |
| Current liabilities total | 28,189 | 46,677 | 31,323 |
| Total liabilities | 156,745 | 243,882 | 181,649 |
| Total equity and liabilities | 394,024 | 498,985 | 421,807 |
| EUR '000 | 30.6.2012 | 30.6.2011 | 31.12.2011 |
|---|---|---|---|
| Liquid funds | 44,968 | 81,817 | 65,878 |
| Interest-bearing receivables | |||
| Current | 3,183 | 1,915 | 1,124 |
| Non-current | 33,852 | 29,138 | 33,896 |
| Interest-bearing receivables | 37,035 | 31,053 | 35,021 |
| Interest-bearing liabilities | |||
| Current | 949 | 2,639 | 1,109 |
| Non-current | 70,861 | 95,060 | 84,334 |
| Interest-bearing liabilities | 71,810 | 97,700 | 85,443 |
| NET TOTAL | 10,193 | 15,170 | 15,455 |
Excluding interest-bearing assets and liabilities classified as held for sale
| EUR '000 | Property, plant and equipment |
Intangible assets |
|---|---|---|
| Acquisition cost 1.1.2012 | 126,721 | 300,481 |
| Additions | 2,832 | 8,845 |
| Disposals | -108 | -1,706 |
| Reclass between items | 25 | 378 |
| Effect of movements in exchange rates | 450 | -12,435 |
| Acquisition cost 30.6.2012 | 129,921 | 295,563 |
| Acquisition cost 1.1.2011 | 132,715 | 354,221 |
| Additions | 4,231 | 420 |
| Disposals * | -524 | -21,574 |
| Transfer to assets held for sale | -353 | 1 |
| Reclass between items | 5,940 | -1,076 |
| Effect of movements in exchange rates | -15,288 | -31,511 |
| Acquisition cost 31.12.2011 | 126,721 | 300,481 |
* Including changes in earn-out liabilities
| EUR '000 | H1/12 | H1/11 | FY/11 |
|---|---|---|---|
| Profit for the period | -4,338 | 40,144 | 22,729 |
|---|---|---|---|
| Adjustments to profit for the period | 9,900 | -30,794 | -21,584 |
| Changes in working capital | 9,823 | -13,382 | -11,799 |
| Discontinued operations | -225 | 2,002 | 8,241 |
| Net cash from operating activities | 15,159 | -2,030 | -2,412 |
| Acquisition of subsidiaries and associates, net of cash acquired |
-25,091 | -500 | -500 |
| Acquisition of joint ventures, net of cash | |||
| acquired | 0 | -1,598 | -1,598 |
| Disposal of subsidiaries and associates, | |||
| net of cash sold | 0 | 81,776 | 83,276 |
| Capital expenditure and other investing activities |
-3,128 | -1,957 | -4,147 |
| Proceeds from repayments of loans and | |||
| loans given | -2,730 | -2,949 | -7,122 |
| Discontinued operations | 0 | -77 | -77 |
| Net cash from investing activities | -30,949 | 74,695 | 69,832 |
| Capital redemption | 0 | -9,617 | -9,617 |
| Dividends paid to non-controlling interests | 0 | -64 | -84 |
| Proceeds from borrowings | 53 | 12,128 | 10,004 |
| Repayment of borrowings, and other | |||
| financing activities | -5,309 | -11,947 | -20,148 |
| Discontinued operations | 0 | -339 | -339 |
| Net cash used in financing activities | -5,256 | -9,840 | -20,184 |
| Net increase in cash and cash equivalents | -21,045 | 62,825 | 47,236 |
| EUR '000 | A | B | C | D | E | F | G | H | I |
|---|---|---|---|---|---|---|---|---|---|
| Equity at 31.12.2010 | 23 642 | 25 740 | 2 193 | 250 849 | 13 921 | -104 772 | 211 574 | 24 781 | 236 355 |
| Dividend distribution | 0 | -613 | -613 | ||||||
| Total comprehensive income 1-6/2011 |
-3 620 | 39 902 | 36 283 | -1 221 | 35 062 | ||||
| Share-based payments | 479 | 479 | 479 | ||||||
| Share subscriptions based on option rights |
86 | 86 | 86 | ||||||
| Capital redemption | -9 617 | -9 617 | -9 617 | ||||||
| Acquisitions and disposals of subsidiaries |
-2 193 | 2 193 | 0 | -6 649 | -6 649 | ||||
| Equity at 30.6.2011 | 23 642 | 25 740 | 0 | 241 318 | 10 302 | -62 197 | 238 805 | 16 298 | 255 103 |
| Dividend distribution | 0 | -17 | -17 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Total comprehensive | -1 306 | -16 239 | -17 545 | -1 933 | -19 478 | ||||
| income 7-12/2011 Share-based payments |
741 | 741 | 741 | ||||||
| Share subscriptions | 3 810 | 3 810 | 3 810 | ||||||
| based on option rights | |||||||||
| Equity at 31.12.2011 | 23 642 | 25 740 | 0 | 245 128 | 8 995 | -77 695 | 225 811 | 14 348 | 240 158 |
| Total comprehensive | 775 | -3 345 | -2 571 | -857 | -3 428 | ||||
| income 1-6/2012 | |||||||||
| Share-based payments | 409 | 409 | 2 | 410 | |||||
| Acquisitions and | 2 784 | 2 784 | -2 646 | 139 | |||||
| disposals of subsidiaries |
During the first half of 2012 the Group sold goods and rendered services to related parties and joint ventures worth EUR 0.3 (3.4) million. The Group also made raw material purchases from a joint venture amounting to EUR 1.1 (0.5) million and accrued interest on loans from a related party amounting to EUR 0.2 (0.3) million. Interest income from a joint venture company totalled EUR 0.5 (0.2) million during the review period.
On 30 June the Group had loans and other receivables from joint venture companies totalling EUR 20.1 (15.1) million and loan receivables from a related party amounting to EUR 10.0 (10.1) million. The Group's loans from a related party amounted to EUR 0.0 (6.0) million and the Group's joint venture's loans from a related party to EUR 11.6 (10.3) million. The Group's trade and other payables to joint venture companies totalled EUR 0.5 (0.0) million.
During the second quarter Ruukki completed the arrangements between the Company and Kermas Limited including the acquisition of Elektrowerk-Weisweiler GmbH from Kermas. Kermas Limited is a major shareholder of Ruukki. The aggregate cash consideration of approximately EUR 25.3 million was paid. In consequence of the arrangements, the Group no longer has earn-out liabilities to related parties.
| H1/12 | H1/11 | FY/11 | |
|---|---|---|---|
| Return on equity, % p.a. | -3.6% | 32.7% | 9.5% |
| Return on capital employed, % p.a. | -2.0% | 23.4% | 7.0% |
| Equity ratio, % | 60.3% | 51.1% | 57.0% |
| Gearing, % | 11.3% | 6.2% | 8.1% |
| Personnel at the end of the period | 762 | 781 | 797 |
The balance sheet date rate is based on exchange rate published by the European Central Bank for the closing date. The average exchange rate is calculated as an average of daily rates from the European Central Bank during the year.
The key exchange rates applied in the accounts:
Average rates
| H1/12 | H1/11 | FY/11 | |
|---|---|---|---|
| TRY | 2.3361 | 2.2081 | 2.3378 |
| USD | 1.2965 | 1.4032 | 1.3920 |
| ZAR | 10.2942 | 9.6856 | 10.097 |
| 30.6.2012 | 30.6.2011 | 31.12.2011 | |
|---|---|---|---|
| TRY | 2.2834 | 2.3500 | 2.4432 |
| USD | 1.259 | 1.4453 | 1.2939 |
| ZAR | 10.3669 | 9.8569 | 10.4830 |
Financial ratios and indicators have been calculated with the same principles as applied in the 2011 financial statements. These principles are presented below.
Return on equity, % = Profit for the period / Total equity (average for the period) * 100
Return on capital employed, % = (Profit before taxes + financing expenses) / (Total assets - interest-free liabilities) average * 100
Equity ratio, % = Total equity / (Total assets - prepayments received) * 100
Gearing, % = (Interest-bearing debt - liquid funds) / Total equity * 100
Net interest-bearing debt = Interest-bearing debt - liquid funds
Earnings per share, basic, EUR = Profit attributable to owners of the parent company / Average number of shares during the period
Earnings per share, diluted, EUR = Profit attributable to owners of the parent company / Average number of shares during the period, diluted
Operating profit (EBIT) = Operating profit is the net of revenue plus other operating income, plus gain/loss on finished goods inventory change, minus employee benefits expense, minus depreciation, amortisation and impairment and minus other operating expense. Foreign exchange gains or losses are included in operating profit when generated from ordinary activities. Exchange gains or losses related to financing activities are recognised as financial income or expense.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) = Operating profit + depreciation + amortisation + impairment losses
This Interim Report is prepared in accordance with the IAS 34 standard. Ruukki Group Plc applies the same accounting and IFRS principles as in the 2011 financial statements.
The preparation of the Interim Report in accordance with IFRS requires management to make estimates and assumptions that affect the valuation of the reported assets and liabilities and other information, such as contingent liabilities and the recognition of income and expenses in the income statement. Although the estimates are based on the management's best knowledge of current events and actions, actual results may differ from the estimates.
The figures in the tables have been rounded off, which must be considered when calculating totals. Average exchange rates for the period have been used for income statement conversions, and period-end exchange rates for balance sheet.
The Interim Report data are unaudited.
Share-related key figures
| Q2/12 | Q2/11 | H1/12 | H1/11 | FY/11 | ||
|---|---|---|---|---|---|---|
| Share price development in London |
||||||
| Stock Exchange | ||||||
| Average share price* | EUR | 0.76 | 1.60 | 0.79 | 1.76 | 1.50 |
| GBP | 0.62 | 1.41 | 0.65 | 1.53 | 1.30 | |
| Lowest share price* | EUR | 0.67 | 1.52 | 0.66 | 1.54 | 0.96 |
| GBP | 0.54 | 1.34 | 0.54 | 1.34 | 0.83 | |
| Highest share price* | EUR | 0.90 | 1.81 | 1.05 | 1.84 | 1.84 |
| GBP | 0.73 | 1.60 | 0.86 | 1.60 | 1.60 |
| Share price at the end of | ||||||
|---|---|---|---|---|---|---|
| the period** | EUR | 0.67 | 1.48 | 0.67 | 1.48 | 1.05 |
| GBP | 0.54 | 1.34 | 0.54 | 1.34 | 0.88 | |
| Market capitalisation at | EUR | |||||
| the end of the period** | million | 166.3 | 368.5 | 166.3 | 368.5 | 261.7 |
| GBP | ||||||
| million | 134.2 | 332.6 | 134.2 | 332.6 | 218.6 | |
| Share trading development |
||||||
| thousand | ||||||
| Share turnover | shares | 43 | 11 | 57 | 93 | 151 |
| EUR | ||||||
| Share turnover | thousand | 33 | 17 | 45 | 164 | 227 |
| GBP | ||||||
| Share turnover | thousand | 27 | 15 | 37 | 142 | 197 |
| Share turnover | % | 0.0% | 0.0% | 0.0% | 0.0% | 0.1% |
| Share price | ||||||
| development in | ||||||
| NASDAQ OMX Helsinki | ||||||
| Average share price | EUR | 0.78 | 1.56 | 0.90 | 1.67 | 1.33 |
| Lowest share price | EUR | 0.63 | 1.40 | 0.63 | 1.40 | 0.81 |
| Highest share price | EUR | 0.90 | 1.80 | 1.02 | 2.03 | 2.03 |
| Share price at the end of | ||||||
| the period | EUR | 0.66 | 1.62 | 0.66 | 1.62 | 0.89 |
| Market capitalisation at | EUR | |||||
| the end of the period | million | 164.0 | 402.1 | 164.0 | 402.1 | 221.1 |
| Share trading | ||||||
| development | ||||||
| thousand | ||||||
| Share turnover | shares | 731 | 3,623 | 2,638 | 5,707 | 11,344 |
| EUR | ||||||
| Share turnover | thousand | 568 | 5,639 | 2,368 | 9,534 | 15,138 |
| Share turnover | % | 0.3% | 1.5% | 1.1% | 2.3% | 4.6% |
* Share prices have been calculated on the average EUR/GBP exchange rate published by Bank of Finland.
** Share price and market capitalisation at the end of the period have been calculated on the EUR/GBP exchange rate published by Bank of Finland at the end of the period.
Formulas for share-related key indicators
Average share price = Total value of shares traded in currency / Number of shares traded during the period
Market capitalisation, million = Number of shares * Share price at the end of the period
This report contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within the Company's control or can be predicted by the Company.
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. Save as required by law (including the Finnish Securities Markets Acts (495/1989), as amended, or by the Listing Rules or the Disclosure and Transparency Rules of the UK Financial Services Authority), the Company undertakes no
obligation to update any forward-looking statements in this report that may occur due to any changes in the Directors' expectations or to reflect events or circumstances after the date of this report.
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