Business Development
In a macro-economically challenging environment, the RHI Group’s sales volume dropped by 5.0% from 1,948,000 tons in the year 2011 to 1,850,000 tons, which was primarily due to weaker steel business in Europe and weaker cement and glass business in Asia.
Although sales volume was lower, revenues of the RHI Group reached a new record level of
€ 1,835.7 million in 2012 (previous year: € 1,758.6 million). The increase by 4.4% in comparison with 2011 is primarily attributable to shifts in product mix, the positive effects of a weaker euro-dollar exchange rate as well as pricing effects.
The operating result before restructuring effects increased by 10.6% in comparison with the previous year, from € 148.6 million to € 164.4 million. The balance of expenses and income from the reversal of impairment losses and restructuring amounted to € 3.2 million and is related to the partial closure of the ISO production line at the Bonnybridge plant, UK, and the sale of the Isithebe plant in South Africa.
The Group’s EBIT amounted to € 167.6 million in the past financial year, exceeding the prior-year EBIT of € 150.9 million by 11.1%. The EBIT margin improved from 8.6% in the year 2011 to 9.1% in the year 2012.
The profit for the year amounted to € 113.5 million in the past financial year, after € 121.5 million in the previous year. Earnings per share decreased from € 3.03 to € 2.85 in the year 2012.
The Management Board of RHI AG will propose a dividend of € 0.75 to the Annual General Meeting on May 3, 2013.
Financial and Assets Position
Net cash flow from operating activities increased from € 124.4 million in the year 2011 to € 161.1 million in the year 2012 due to a positive development of the operating business and consistent working capital management.
Net cash flow from investing activities rose from € (105.5) million in the previous year to € (165.9) million in the year 2012 as the self-sufficiency level for magnesia raw materials was increased to 80% with the construction of the smelter in Norway and the second rotary kiln in Turkey, the flow control segment was strengthened through the acquisition of the remaining 50% share in Stopinc AG, Switzerland, and a fourth tunnel kiln was built at the Dalian plant in China.
The balance sheet total of the RHI Group increased by 9.5%, from € 1,689.9 million in the previous year to € 1,850.3 million in 2012, which was mainly due to the above-mentioned investments.
The consolidated statement of financial position as of December 31, 2012 shows net financial liabilities of € 418.5 million (previous year: € 361.5 million). That corresponds to roughly 1.8 times the EBITDA of the year 2012.
RHI continued to build up equity in 2012. At December 31, 2012 it amounted to € 480.5 million (previous year: € 438.9 million). The equity ratio remained stable at 26.0% due to the higher balance sheet total.
Steel Division
In a challenging market environment, in which many steel producers struggled with losses resulting from the decline in demand, the sales volume of the Steel Division was also down 7% year-on-year and amounted to 1,245,000 tons, thus even slightly below the level of the year 2010. In contrast, revenues were maintained stable at € 1,112.7 million after € 1,106.8 million in the previous year and reflect the adjustments in pricing necessary due to soaring raw material prices, and the more favorable regional mix. The operating result amounted to € 54.0 million in the past financial year after € 66.0 million in the previous year.
Industrial Division
Sales volume of the Industrial Division decreased by 7% to roughly 470,000 tons in comparison with the previous year due to a shift in product mix and a challenging environment in the glass industry. Despite the decline in volume, revenues rose by 9.8% to a new record level of € 673.9 million after
€ 613.9 million in the year 2011. This increase is mainly attributable to a higher share of the service business, the delivery of a major project in the ferrochrome segment as well as a positive
development in the business units nonferrous metals and environment, energy chemicals. Both business units realized a historic record in both revenues and contribution to earnings. The operating result thus improved significantly from € 69.9 million to € 91.8 million in the year 2012.
Raw Materials Division
Despite a difficult market environment, production in the Raw Materials Division was at a very high level in the first half 2012, but could not be maintained constant at this level throughout the year. As sales volume declined in the Steel and Industrial Divisions, internal demand for raw materials dropped accordingly. Revenues in the Raw Materials Division amounted to € 237.6 million in the past financial year, compared with € 208.3 million in the year 2011. The operating result of € 12.7 million in the year 2011 was increased to € 18.6 million in 2012.
Outlook
RHI expects revenues to reach a similar level in the year 2013 as in 2012 if the macroeconomic environment remains stable and exchange rates do not change. The EBIT margin should continue to improve due to increased backward integration and consistent cost management.
The expected lower growth rates in Europe require an adjustment of capacities in order to ensure optimal utilization of the production plants. Therefore, a plant concept is currently being evaluated in the RHI Group. The results are expected in the first half of 2013.
RHI will invest some € 75 million in the year 2013, of which roughly 25% will be used for environmental investments.
| Preliminary Key Figures in € million | 2012 | 20111) | Delta |
| Balance sheet total | 1,850.3 | 1,689.9 | 9.5% |
| Equity | 480.5 | 438.9 | 9.5% |
| Equity ratio (in %) | 26.0% | 26.0% | 0.0pp |
| Investments in PP&E and intangible assets | 167.9 | 86.6 | 93.9% |
| Net debt | 418.5 | 361.5 | 15.8% |
| Gearing ratio (in %)2) | 87.1% | 82.4% | 4.7pp |
| Net debt / EBITDA | 1.8 | 1.8 | 0.0 |
| Working capital | 479.6 | 473.8 | 1.2% |
| Working capital (in %) | 26.1% | 26.9% | (0.8pp) |
| Capital employed | 1,184.4 | 1,049.0 | 12.9% |
| Return on capital employed (in %) | 11.6% | 14.5% | (2.9pp) |
| Net cash flow from operating activities | 161.1 | 124.4 | 29.5% |
| Net cash flow from investing activities | (165.9) | (105.5) | 57.3% |
| Net cash flow from financing activities | 47.8 | 67.3 | (29.0%) |
1) after reclassification (for explanations refer to the report for the third quarter 2012)
2) without non-current personnel provisions
Preliminary Key Figures 2012
| in € Mio | 2012 | 20111) | Delta | 4Q/12 | 4Q/111) | Delta | |
| Revenues | 1,835.7 | 1,758.6 | 4.4% | 463.0 | 477.9 | (3.1%) | |
| Steel Division | 1,112.7 | 1,106.8 | 0.5% | 264.7 | 281.5 | (6.0%) | |
| Industrial Division | 673.9 | 613.9 | 9.8% | 186.9 | 181.1 | 3.2% | |
| Raw Materials Division | |||||||
| External revenues | 49.1 | 37.9 | 29.6% | 11.4 | 15.3 | (25.5%) | |
| Internal revenues | 188.5 | 170.4 | 10.6% | 44.3 | 39.6 | 11.9% | |
| EBITDA | 229.4 | 204.1 | 12.4% | 48.4 | 56.1 | (13.7%) | |
| EBITDA margin | 12.5% | 11.6% | 0.9pp | 10.5% | 11.7% | (1.2pp) | |
| Operating result1) | 164.4 | 148.6 | 10.6% | 31.8 | 40.2 | (20.9%) | |
| Steel Division | 54.0 | 66.0 | (18.2%) | 3.8 | 17.2 | (77.9%) | |
| Industrial Division | 91.8 | 69.9 | 31.3% | 26.7 | 19.3 | 38.3% | |
| Raw Materials Division | 18.6 | 12.7 | 46.5% | 1.3 | 3.7 | (64.9%) | |
| Operating result margin | 9.0% | 8.4% | 0.6pp | 6.9% | 8.4% | (1.5pp) | |
| Steel Division | 4.9% | 6.0% | (1.1pp) | 1.4% | 6.1% | (4.7pp) | |
| Industrial Division | 13.6% | 11.4% | 2.2pp | 14.3% | 10.7% | 3.6pp | |
| Raw Materials Division | 7.8% | 6.1% | 1.7pp | 2.3% | 6.7% | (4.4pp) | |
| EBIT | 167.6 | 150.9 | 11.1% | 33.3 | 42.5 | (21.6%) | |
| Steel Division | 50.1 | 67.4 | (25.7%) | 5.1 | 18.6 | (72.6%) | |
| Industrial Division | 91.8 | 73.4 | 25.1% | 27.1 | 22.8 | 18.9% | |
| Raw Materials Division | 25.7 | 10.1 | 154.5% | 1.1 | 1.1 | 0.0% | |
| EBIT margin | 9.1% | 8.6% | 0.5pp | 7.2% | 8.9% | (1.7pp) | |
| Steel Division | 4.5% | 6.1% | (1.6pp) | 1.9% | 6.6% | (4.7pp) | |
| Industrial Division | 13.6% | 12.0% | 1.6pp | 14.5% | 12.6% | 1.9pp | |
| Raw Materials Division | 10.8% | 4.8% | 6.0pp | 2.0% | 2.0% | 0.0pp | |
| Financial results | (21.3) | (30.9) | (31.1%) | (6.6) | (6.8) | (2.9%) | |
| Result from associates | 5.3 | 5.5 | (3.6%) | 0.9 | 0.9 | 0.0% | |
| Profit before income taxes | 151.6 | 125.5 | 20.8% | 27.6 | 36.6 | (24.6%) | |
| Income taxes | (38.1) | (4.7) | 710.6% | 0.3 | (5.8) | (105.2%) | |
| Income taxes (in %) | 25.1% | 3.7% | 21.4pp | (1.1%) | 15.8% | (16.9pp) | |
| Profit from continuing operations | 113.5 | 120.8 | (6.0%) | 27.9 | 30.8 | (9.4%) | |
| Profit from discontinued operations | 0.0 | 0.7 | (100.0%) | 0.0 | 0.7 | (100.0%) | |
| Profit for the year | 113.5 | 121.5 | (6.6%) | 27.9 | 31.5 | (11.4%) | |
| Earnings per share in € | |||||||
| Continuing operations | 2.85 | 3.03 | 0.71 | 0.77 | |||
| Discontinued operations | 0.00 | 0.02 | 0.00 | 0.02 |
1) after reclassification (for explanations refer to the report for the third quarter 2012)
2) before restructuring effects