Despite an environment strongly characterized by uncertainty, RHI realized the second highest quarterly revenues in the group’s history, which were only € 2.0 million below the record level of the fourth quarter of 2011. Both divisions recorded substantial growth in revenues: revenues of the Steel Division exceeded the previous record of the third quarter of 2011 by 5.1% and is primarily attributable to the good performance in Europe and North America. Revenues in the Industrial Division reached the second highest level ever recorded in this division, despite the seasonality of the cement business, and is based on good business developments in the nonferrous metals and environment, energy, chemicals segments. Moreover, RHI also reached a new record level in the operating result since the crisis in 2009.
In detail:
In the second quarter of 2012, revenues of the RHI Group increased by 8.9% in comparison with the same quarter of 2011 and amounted to € 475.9 million. The Steel Division increased its revenues by 6.0% and the Industrial Division recorded growth of 13.3%. The operating result of the second quarter exceeded the comparative period of 2011 by 21.8% and, at € 48.7 million, reached a new record level since the recession in the year 2009. Restructuring expenses of € 4.6 million resulted from the partial closure of a production line at the Bonnybridge plant in Great Britain. The group’s EBIT amounted to € 44.1 million in the past quarter and is 10.3% higher than in the second quarter of 2011 despite the restructuring expenses incurred. The EBIT margin improved slightly from 9.2% to 9.3%.
Although a dividend of € 29.9 million (€ 0.75 per share) was paid out, the equity ratio as of June 30, 2012 increased to 26.9%, after 26.7% at March 31, 2012. Cash and cash equivalents fell from € 154.1 million to € 107.1 million in 2012 due the raw material projects in Norway and Turkey and investments in a fourth tunnel kiln in China, the dividend payment and an increase in working capital compared with the end of the first quarter. Net debt rose from € 363.1 million to € 424.7 million.
Net cash flow from operating activities rose only marginally in the second quarter of 2012 to an accumulated € 48.4 million (Q1/2012: € 45.0 million). This is primarily attributable to an increase in receivables related to revenues.
| 2nd Quarter | 1st Half-year | |||
| in € million | 2012 | 2011 | 2012 | 2011 |
| Revenues | 475.9 | 437.1 | 912.8 | 850.9 |
| EBITDA | 60.6 | 53.0 | 108.2 | 95.4 |
| EBITDA margin | 12.7% | 12.1% | 11.9% | 11.2% |
| Operating result* | 48.7 | 40.0 | 82.3 | 69.2 |
| Operating result margin | 10.2% | 9.2% | 9.0% | 8.1% |
| EBIT | 44.1 | 40.0 | 77.7 | 69.2 |
| EBIT margin | 9.3% | 9.2% | 8.5% | 8.1% |
| Profit before income tax | 38.1 | 34.9 | 73.5 | 58.6 |
| Profit | 30.3 | 30.7 | 62.3 | 49.0 |
| Net cash flow from operating activities | 3.4 | 2.3 | 48.4 | 29.1 |
| Investments in PP&E and intangible assets | 33.7 | 10.2 | 64.2 | 15.1 |
| Number of employees at end of half-year | 8,072 | 7,796 | ||
* before reversal of impairment losses/impairment losses and restructuring costs
Steel Division
In the second quarter of 2012, revenues in the Steel Division reached a new record level of € 296.8 million, thus significantly exceeding the figure of € 279.1 million in the first quarter of 2012 and the revenues of € 280.1 million in the comparable period of 2011. The operating result improved substantially from € 12.8 million in the first quarter of 2012 to € 21.9 million in the second quarter of 2012, also exceeding the result of € 20.6 million in the same period of 2011. The operating result margin, at 7.4%, significantly exceeded that of the previous quarter at 4.6% and remained stable in comparison with the same period of 2011. The restructuring expenses resulting from the partial shutdown of a production line at the Scottish plant Bonnybridge lowered the EBIT margin by 1.6 percentage points to 5.8%.
Industrial Division
At € 169.2 million in the second quarter of 2012, revenues in the Industrial Division clearly exceeded the revenues of the first quarter of 2012 of € 143.0 million and those of the 2011 reference period of € 149.3 million. EBIT improved significantly from € 13.1 million in the first quarter of 2012 to € 21.1 million in the second quarter of 2012 and also exceeded the figure of € 18.2 million in the 2011 reference quarter. The EBIT margin, at 12.5%, was significantly higher than in the previous quarter with 9.2% and slightly above that of the prior-year period.
Raw Materials Division
In the second quarter of 2012, revenues of the Raw Materials Division amounted to € 62.0 million, slightly exceeding the figure of the first quarter of 2012 of € 60.2 million and significantly exceeding revenues of the 2011 reference period, which had amounted to € 54.8 million. The decline in external revenues compared with the previous quarter resulting from the expiry of delivery obligations of the Irish company Premier Periclase Ltd. (PPL), which had been acquired in 2011, was compensated by higher internal demand for raw materials as externally purchased raw materials were replaced by own raw materials. EBIT declined due to a lack of income from the sale of properties (previous quarter: € 2.7 million) from € 7.7 million in the first quarter of 2012 to € 5.7 million in the second quarter of 2012, but significantly exceeded the figure of € 1.2 million in the comparable quarter of 2011. At 9.2%, the EBIT margin was lower than in the previous quarter, at 12.8%, and significantly exceeded that of the prior-year reference period.
Investments
The second rotary kiln in Turkey will be commissioned in late August. Consequently, RHI will have another 70,000 tons of high-grade sintered magnesia at its disposal. The construction of the fusing plant in Norway is also progressing. The step-by-step commissioning of the fusing lines in Porsgrunn, Norway, is expected to start in September. Full-load operations, with an annual production of roughly 80,000 tons of seawater-based fused magnesia, can be expected for November; this will effectively make RHI self-sufficient in fused magnesia outside of China. In late June, the fourth tunnel kiln at the RHI Group’s largest plant for fired bricks in China was commissioned.
Outlook
In a stable macroeconomic environment and with unchanged foreign currency exchange rates, RHI expects a slightly lower level of revenues in the Steel Division than in the first half of 2012 due to seasonal factors and significantly higher revenues in the Industrial Division in the second half of the year. Price increases in combination with a positive contribution to earnings from the initiated backwards integration projects as well as a higher share of industrial business should lead to a further increase in the EBIT margin in the second half of the year, which leads us to expect a higher EBIT margin in the entire year 2012 than in the previous financial year.