Business Development The RHI Group’s sales volume rose from roughly 1,768,000 tons in the previous year to roughly 1,868,000 tons in 2014. This is primarily attributable to increased sales activities of the Raw Materials Division. Revenues in the past financial year amounted to € 1,721.2 million, after € 1,754.7 million in the year 2013. While revenues in the Steel Division rose by 1.0%, the Industrial Division recorded a decline in revenues by 8.5% compared to the previous year as customers in the nonferrous metals business unit postponed major projects and due to weaker demand in the glass business.
The operating EBIT before impairment and restructuring costs increased from € 126.8 million in the previous year to € 141.9 million in the past financial year. While the Steel Division benefitted from an improved product mix and higher utilization of the production capacities as a result of the closure of the Duisburg plant, Germany, in early 2014, the operating EBIT of the Industrial Division decreased because of a decline in revenues and the related lack of coverage of fixed costs at the production facilities. The operating EBIT of the Raw Materials Division improved due to the progress made in optimizing the fused magnesia production at the site in Porsgrunn, Norway.
EBIT amounted to € 109.3 million in the past financial year and includes impairments on existing assets of the glass business unit amounting to roughly € 12 million and some € 7 million related to the fused magnesia production in Norway. In addition, EBIT of the year 2014 was affected by restructuring expenses resulting from the discontinuation of operations at the site in Kretz, Germany, in the course of optimizing raw material treatment in Europe, which amounted to roughly € 10 million, and from the closure of the plant in Duisburg, Germany, which amounted to roughly € 4 million. In the previous year EBIT was € 111.1 million and included, amongst other things, net income of roughly € 76 million from the termination of the US Chapter 11 proceedings, restructuring costs of roughly € 25 million for the closure of the plant in Duisburg, Germany, and an impairment of roughly € 65 million for the plant in Porsgrunn, Norway.
Profit after income tax thus totaled € 52.5 million in the financial year 2014 compared with € 63.4 million in the previous year. Earnings per share dropped from € 1.57 to € 1.28. The Management Board of RHI AG will propose a dividend of € 0.75 to the Annual General Meeting on May 8, 2015.
Financial and Assets Position Net cash flow from operating activities decreased from € 171.5 million in the previous year to € 72.4 million in the past financial year. While the prior-year figure was positively influenced by net cash inflows resulting from the termination of the US Chapter 11 proceedings totaling € 24.8 million, an increase in working capital by € 89.9 million had a negative impact in the year 2014. Net cash flow from investing activities included payouts related to the acquisition of the 69.9% share in the Indian company Orient Refractories Ltd. amounting to € 48.7 million in the previous year and declined from € (125.1) million in the year 2013 to € (61.1) million in the year 2014.
Working capital amounted to € 570.9 million at the end of the financial year, versus € 481.0 million in the previous year. The increase in inventories by some € 40 million is predominantly attributable to regions where RHI has no production capacities, for example North and South America, and is also influenced by exchange rate effects such as the strengthening of the US dollar against the euro. RHI currently works on new approaches to optimize the supply chain with the objective to reduce inventories by roughly € 100 million on a sustained basis. The higher receivables are due, amongst other things, to very strong monthly revenues in December 2014, which exceeded € 186 million.
The balance sheet total of the RHI Group increased by 7.9%, from € 1,724.0 million in the previous year to € 1,860.5 million in the year 2014, which was primarily due to an increase in working capital and higher non-current financial liabilities resulting from the issue of a Schuldscheindarlehen. The RHI Group’s equity amounted to € 493.9 million at December 31, 2014 after € 485.5 million in the previous year. The consolidated statement of financial position as of December 31, 2014 shows net financial liabilities of € 466.9 million (previous year: € 422.9 million). That corresponds to 2.3 times the EBITDA of the year 2014.
Steel Division The Steel Division’s revenues were up 1.0% from € 1,097.5 million to € 1,108.8 million. The sharp drop in revenues in South America due to a highly competitive situation resulting from the strong devaluation of local currencies was balanced out by growth in all other regions. The business development was particularly positive in India, Africa and the Middle East, where significant increases were recorded. The operating EBIT rose from € 64.4 million in the previous year to € 93.1 million in the past financial year due to improvements in the product mix and higher utilization of the production capacities resulting from the closure of the plant in Duisburg, Germany, at the beginning of the year.
Industrial Division The decline in revenues of the Industrial Division from € 619.0 million in the year 2013 to € 566.6 million in the year 2014 is primarily attributable to weaker demand in the nonferrous metals and glass business units. While falling metal prices caused customers of the former to postpone major repairs, worldwide excess capacity burdened the market environment for the latter. The operating EBIT decreased from € 70.2 million in the year 2013 to € 48.6 million in the past financial year as a result of lower revenues and the related lack of coverage of fixed costs at the production plants.
Raw Materials Division Revenues of the Raw Materials Division were up 10.5%, from € 274.4 million in the previous year to € 303.3 million in the past financial year. This is due to both an increase in internal demand and higher external revenues. The operating EBIT rose from € (7.8) million in the previous year to € 0.2 million in the past financial year. This development reflects the progress made in optimizing the production of fused magnesia at the site in Porsgrunn, Norway, and successes resulting from a continuous improvement program.
Outlook
The outlook given in the ad hoc release of January 23, 2015 is confirmed. Due to the positive development of incoming orders in the past months and the measures taken by the management, RHI thus expects a year-on-year increase in revenues by roughly 3% and an operating result margin of approximately 9% in the current economic environment. If the US dollar continues to strengthen against the euro, further positive effects on revenues and EBIT can be expected. In the year 2015, the RHI Group will make investments totaling roughly € 80 million.
| Preliminary key figures in € million | 2014 | 2013 | Delta |
| Balance sheet total | 1,860.5 | 1,724.0 | 7.9% |
| Equity | 493.9 | 485.5 | 1.7% |
| Equity ratio (in %) | 26.5% | 28.2% | (1.7)pp |
| Investments in PP&E and intangible assets | 76.2 | 89.4 | (14.8)% |
| Net debt | 466.9 | 422.9 | 10.4% |
| Gearing ratio (in %) | 94.5% | 87.1% | 7.4pp |
| Net debt / EBITDA | 2.3 | 1.6 | 0.7 |
| Working capital | 570.9 | 481.0 | 18.7% |
| Working capital (in %) | 33.2% | 27.4% | 5.8pp |
| Capital employed | 1,225.3 | 1,138.8 | 0.0% |
| Return on average capital employed (in %) | 6.5% | 7.3% | (0.8)pp |
| Net cash flow from operating activities | 72.4 | 171.5 | (57.8)% |
| Net cash flow from investing activities | (61.1) | (125.1) | 51.2% |
| Net cash flow from financing activities | 24.6 | (112.8) | 121.8% |
Preliminary key figures 2014
| in € million | 2014 | 2013 | Delta | 4Q/14 | 4Q/13 | Delta | |
| Revenues | 1,721.2 | 1,754.7 | (1.9)% | 466.5 | 456.6 | 2.2% | |
| Steel Division | 1,108.8 | 1,097.5 | 1.0% | 293.6 | 278.7 | 5.3% | |
| Industrial Division | 566.6 | 619.0 | (8.5)% | 162.7 | 170.9 | (4.8)% | |
| Raw Materials Division | |||||||
| External revenues | 45.8 | 38.2 | 19.9% | 10.2 | 7.0 | 45.7% | |
| Internal revenues | 257.5 | 236.2 | 9.0% | 62.6 | 58.1 | 7.7% | |
| EBITDA 1) | 199.4 | 260.7 | (23.5)% | 51.8 | 42.9 | 20.7% | |
| EBITDA margin | 11.6% | 14.9% | (3.3)pp | 11.1% | 9.4% | 1.7pp | |
| Operating EBIT 2) | 141.9 | 126.8 | 11.9% | 41.8 | 18.0 | 132.2% | |
| Steel Division | 93.1 | 64.4 | 44.6% | 27.9 | 7.1 | 293.0% | |
| Industrial Division | 48.6 | 70.2 | (30.8)% | 18.2 | 19.7 | (7.6)% | |
| Raw Materials Division | 0.2 | (7.8) | 102.6% | (4.3) | (8.8) | 51.1% | |
| Operating EBIT margin | 8.2% | 7.2% | 1.0pp | 9.0% | 3.9% | 5.1pp | |
| Steel Division | 8.4% | 5.9% | 2.5pp | 9.5% | 2.5% | 7.0pp | |
| Industrial Division | 8.6% | 11.3% | (2.7)pp | 11.2% | 11.5% | (0.3)pp | |
| Raw Materials Division 3) | 0.1% | (2.8)% | 2.9pp | (5.9)% | (13.5)% | 7.6pp | |
| EBIT | 109.3 | 111.1 | (1.6)% | 11.9 | (53.0) | 122.5% | |
| Steel Division | 91.4 | 97.3 | (6.1)% | 27.7 | 3.3 | 739.4% | |
| Industrial Division | 34.9 | 86.8 | (59.8)% | 5.7 | 17.7 | (67.8)% | |
| Raw Materials Division | (17.0) | (73.0) | 76.7% | (21.5) | (74.0) | 70.9% | |
| EBIT margin | 6.4% | 6.3% | 0.1pp | 2.6% | (11.6)% | 14.2pp | |
| Steel Division | 8.2% | 8.9% | (0.7)pp | 9.4% | 1.2% | 8.2pp | |
| Industrial Division | 6.2% | 14.0% | (7.8)pp | 3.5% | 10.4% | (6.9)pp | |
| Raw Materials Division 3) | (5.6)% | (26.6)% | 21.0pp | (29.5)% | (113.7)% | 84.2pp | |
| Net finance costs | (32.7) | (29.8) | (9.7)% | (10.3) | (1.9) | (442.1)% | |
| Share of profit of joint ventures | 8.2 | 8.0 | 2.5% | 2.5 | 2.8 | (10.7)% | |
| Profit before income taxes | 84.8 | 89.3 | (5.0)% | 4.1 | (52.1) | 107.9% | |
| Income taxes | (32.3) | (26.6) | (21.4)% | (3.2) | 13.6 | (123.5)% | |
| Income taxes (in %) | 38.1% | 29.8% | 8.3pp | 78.0% | 26.1% | 51.9pp | |
| Profit from continued operations | 52.5 | 62.7 | (16.3)% | 0.9 | (38.5) | 102.3% | |
| Profit from discontinued operations | 0.0 | 0.7 | (100.0)% | 0.0 | 0.7 | (100.0)% | |
| Profit for the year | 52.5 | 63.4 | (17.2)% | 0.9 | (37.8) | 102.4% | |
| Earnings per share in € 4) | |||||||
| Continuing operations | 1.28 | 1.55 | 0.01 | (0.97) | |||
| Discontinued operations | 0.00 | 0.02 | 0.00 | 0.02 |
1) 2013 adjusted for income from the reversal of investment grants recognized as liabilities 2) EBIT before impairment losses, restructuring effects and result from the US Chapter 11 proceedings 3) based on internal and external revenues 4) basic and diluted 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