Mar. 12, 2010
RHI AG recently announced its preliminary financial results for 2009, including revenues of 1,236.9 million (approximately $1,684.0 million), a decline of 22.5% compared to 2008. EBIT equaled 54.8 million (~ $74.6 million) after restructuring measures and impairment losses totaling 24.2 million ($32.9 million), vs. 148.4 million (~ $202.0 million) in 2008. This value was achieved through capacity adjustments in all three divisions, an extensive cost-cutting program and the resulting significantly improved cost structure. The operating margin, which amounted to 6.4% for all of 2009, significantly improved in the fourth quarter (to 9.9%).
The year 2009 was characterized by a massive slump in steel output in Europe and North America in the first half, and by a recovery in the second half of the year. Over the entire year, steel production recorded a decline of 30% in the EU27 and 34% in North America. In contrast, steel output in China rose by 13.5%. The cement market suffered a drop of up to 50% in some countries, while markets like China and the Near/Middle East remained unaffected by the crisis. The glass industry focused its investments on repairs to extend useful life, and low raw material prices triggered an investment stop in the nonferrous metals industry.
"Against the backdrop of the extremely difficult market environment, our remarkable operating result and our net profit of 21.4 million (~ $29.1 million) must be considered a success," said Thomas Fahnemann, CEO.
RHI's Steel Division achieved revenues of 703.6 million (~ $957.9 million) and, at 206.2 million (~ $280.7 million) in the fourth quarter, exceeded the 2009 third quarter level by 15%. The Industrial Division benefited from projects dating back to 2008 in the first quarter of 2009 and was affected by a drop in demand from the second quarter of 2009. With revenues of 513.6 million (~ $699.2 million), the operating result of 75.5 million (~ $102.8 million) was only slightly below the prior-year figure of 79.3 million (~ $108.0 million). The operating result in the Raw Materials Division was 10.5 million (~ $14.3 million), which was down from 28.2 million (~ $38.4 million) in 2008 and was mostly attributable to the underutilization of capacity in the first three quarters.
The initiated cost-cutting program resulted in savings of roughly 53 million (~ $72.2 million) for 2009, which exceeded the target of 40 million (~ $54.5 million). Through active cash flow management, cash flow from operating activities was increased by 64%. In addition, RHI introduced a new profit center structure in 2009 that gives the company an orientation closer to the market and the customer. A new plant concept allows for the flexible adjustment of capacities to market conditions.
"While in the first months of 2009 we placed the focus on active crisis management, secured liquidity and rapidly implemented the necessary capacity adjustments, we were already able to reap the benefits of these measures on the cost side in the fourth quarter of 2009," said Fahnemann. "In addition, we set the course for future growth through comprehensive structural changes. Our focus now clearly lies on further growth in the emerging markets and strengthening backward integration. In line with the new corporate strategy, which was also established in 2009, we intend to increase our market share significantly in these growth regions by 2015 through targeted investments, thus expanding our world market leadership."
RHI expects the positive trend to continue in the Steel Division in the first half of 2010. The level of revenues and earnings in the first quarter will be comparable to that of the fourth quarter of 2009. The development of the industrial business, which is project-driven to a great extent, will largely depend on the expected infrastructure projects in Europe and North America; the development of raw material prices; and customers ability to finance projects. The Raw Materials Division expects largely full-capacity utilization at its Western plants in 2010.
RHI expects further growth in the Steel Division for the whole year 2010, while the Industrial Division will see a development similar to 2009. Due to the market recovery, the expansion of the market position and an improved cost structure, RHI expects revenues and earnings to increase.
