In the second quarter of 2015, the RHI Group increased its revenue by 12.7% compared with the first quarter of 2015 to € 477.9 million. This is in particular due to significantly higher revenue in the Steel Division in Europe and North America as well as in the environment, energy, chemicals, glass and nonferrous metals business units.
The operating result, at € 34.1 million in the second quarter of 2015, is at the level of the preceding quarter. The market environment of the Steel Division is characterized by an aggressive export strategy of Chinese steel producers as a result of a weak domestic market and high excess capacities. This led to high pressure on steel prices and consequently the profitability of manufacturers and further on the supply industries. In combination with negative product mix effects in the linings business, this resulted in a weaker contribution to earnings by the Steel Division compared with the first quarter of 2015. In contrast, the Industrial Division significantly increased its operating EBIT due to the delivery of projects. While the operating EBIT of the first quarter of 2015 still included slightly positive currency translation effects from intra-group transactions and the measurement of balance sheet items, the second quarter of 2015 was negatively influenced. The operating EBIT margin of the RHI Group declined from 8.1% in the first quarter of 2015 to 7.1% in the second quarter.
First half-year In the first half of 2015, the RHI Group’s revenue was up 7.5% on the comparative period of 2014 and amounted to € 902.0 million. The Steel Division’s revenue rose by 7.3% primarily because of positive currency translation effects and a strong business development in India. The 11.2% increase in revenue in the Industrial Division compared with the weak first half of 2014 is primarily attributable to higher project deliveries in the glass and environment, energy, chemicals business units.
The operating EBIT amounted to € 68.6 million in the first half of the year. This corresponds to a decline by 4.5% compared with the operating EBIT of € 71.8 million in the first half of 2014. This development is primarily attributable to the Raw Materials Division’s low contribution to earnings resulting from weaker capacity utilization at the raw material plants as well as falling raw material prices. While the Industrial Division benefited from a better utilization of fixed costs as a result of higher revenue, a better margin situation in the glass business unit and several major repairs in the nonferrous metals business unit, the operating EBIT of the Steel Division declined in the second quarter of 2015 due to a weaker margin development in Europe and in the Middle East, as well as to negative product mix effects. The operating EBIT margin fell from 8.6% in the first half of 2014 to 7.6% in the first half of 2015. EBIT of the first half of 2015 included no extraordinary effects and thus corresponded to the operating EBIT.
Net cash flow from operating activities amounted to € 64.9 million in the first half of 2015 after € 12.4 million in the comparative period of 2014. Working capital, which consists of inventories and trade receivables less trade payables and prepayments received, rose by € 26.8 million compared with the end of the year 2014 and amounted to € 597.7 million at June 30, 2015. This increase was amongst other things due to currency effects. Compared with the end of the first quarter of 2015, however, a reduction by € 22.0 million was recorded in the past quarter, despite a significant increase in revenue.
Net cash flow from investing activities amounted to € (2.1) million in the first half of the year and includes payments related to the sale of securities due to surplus coverage of the legally required provisions for pensions of two companies as well as payments from the sale of a 2.6% share in a German residential property company totaling € 13.9 million. Free cash flow thus amounted to € 62.8 million in the first half of 2015 after € 3.0 million in the comparative period of 2014.
Cash and cash equivalents decreased from € 151.1 million at December 31, 2014 to € 129.6 million due to the dividend payment of € 29.9 million, the working capital build-up and the repayment of non-current financial liabilities. Net debt declined from € 466.9 million at the end of the year 2014 to € 448.9 million at June 30, 2015 due to a favorable cash flow development.
Equity amounted to € 549.5 million at June 30, 2015 after € 493.9 million at December 31, 2014. The equity ratio rose from 26.5% at the end of the financial year 2014 to 29.4% at June 30, 2015.
Outlook The economic framework conditions do not indicate a significant recovery in the main customer markets for the second half of 2015. Weak domestic demand in China leads to expectations that export activities for Chinese steel will continue to increase, which causes an additional burden on our steel customers outside of China. Important industrial metals such as aluminum, copper, nickel and tin reached new five-year lows in July 2015. RHI expects a currency-driven increase in revenue of more than 3% for the year 2015. In this environment and provided that the exchange rates remain stable, the operating EBIT margin will amount to roughly 8%, contrary to previous expectations of roughly 9%.
| in € million | 1H/15 | 1H/14 | Delta | 2Q/15 | 1Q/15 | Delta | |
| Revenue | 902.0 | 839.1 | 7.5% | 477.9 | 424.1 | 12.7% | |
| EBITDA | 102.5 | 104.7 1) | (2.1)% | 51.3 | 51.2 | 0.2% | |
| EBITDA margin | 11.4% | 12.5% | (1.1)pp | 10.7% | 12.1% | (1.4)pp | |
| Operating EBIT 2) | 68.6 | 71.8 | (4.5)% | 34.1 | 34.5 | (1.2)% | |
| Operating EBIT margin | 7.6% | 8.6% | (1.0)pp | 7.1% | 8.1% | (1.0)pp | |
| EBIT | 68.6 | 72.1 | (4.9)% | 34.1 | 34.5 | (1.2)% | |
| EBIT margin | 7.6% | 8.6% | (1.0)pp | 7.1% | 8.1% | (1.0)pp | |
| Profit before income taxes | 63.0 | 62.6 | 0.6% | 33.1 | 29.9 | 10.7% | |
| Profit from continuing operations | 44.6 | 42.6 | 4.7% | 23.5 | 21.1 | 11.4% |
1) adjusted for income from the reversal of investment subsidies recognized as liabilities
2) EBIT before impairment and restructuring expenses and result from Chapter 11