Throughout the first half of 2009, the global economic situation was characterised by a profound recession worldwide. This had significant negative effects on the customers of the RHI Group, where demand plummeted in nearly all industries, causing high double-digit production cuts compared with the previous year. As a result of the market situation, incoming orders and the revenue development of RHI, the world market leader in refractories, declined in all divisions in the first half of 2009.
RHI immediately reacted to the changed framework conditions with structural and capacity adjustments, a group-wide cost saving programme and a programme to lower working capital. These programmes are being implemented according to plan and enabled RHI to generate a positive operating result (EBIT) in the first half of 2009 despite the contraction of the market. Thomas Fahnemann, Chairman of the Management Board of RHI: “RHI has implemented the change from a boom scenario to a recession scenario within a few weeks, and is prepared for the currently very difficult market and financial situation.”
Positive operating result – net debt reduced In the first half of 2009, RHI’s revenues fell by 25.1% to € 604.5 million compared with the record year 2008. The decline of the RHI Group’s revenues is thus significantly lower than in the customer industries, some of which suffered 40-50% drops in revenues. EBITDA amounted to € 49.6 million (previous year: € 122.7 million); EBIT was clearly positive at € 21.4 million (previous year: € 98.1 million) despite the restructuring costs of € 6.8 million incurred in the second quarter. The Group’s profit amounted to € 2.3 million (previous year: € 70.4 million) in the first six months of 2009.
Since the beginning of the year, the RHI Group’s equity rose by 8.2% from € 181.8 million to € 196.7 million, so that the equity ratio continued to improve to 15.6% (31.12.2008: 13.7%). Net debt was reduced by 17.8% to € 308.4 million in the first half of 2009.
| 1st Half | |||
| in € million | 2009 | 2008 | Change |
| Revenues | 604,5 | 806,8 | -25.1% |
| EBITDA | 49,6 | 122,7 | -59.6% |
| EBITDA margin | 8.2% | 15.2% | -46.0% |
| EBIT | 21,4 | 98,1 | -78.2% |
| EBIT margin | 3.5% | 12.2% | -71.3% |
| Profit before income taxes | 3,1 | 81,6 | -96.2% |
| Profit from continuing operations | 2,3 | 71,6 | -96.8% |
| Loss from discontinued operations | 0 | -1,2 | n.a. |
| Profit | 2,3 | 70,4 | -96.7% |
| Diluted earnings per share (in €) | 0,05 | 1,77 | -97.2% |
Steel Division As a result of the international recession, world steel production fell 21.1% period-on-period in the first six months of 2009, with an especially dramatic drop in the European Union (-43.2%) and North America (-48.5%). It was only towards the middle of the year that the steel market started to stabilise at a low level. In this negative environment, RHI managed to gain market share in Europe and America, and to record double-digit growth in revenues and incoming orders in Asia. Overall, however, the difficult market situation let do a decline in revenues to € 317.1 million (previous year: € 486.6 million) in the Steel Division.
Industrial Division While the Industrial Division benefited from existing orders in the first quarter of 2009, incoming orders also declined in this division as expected in the second quarter.
The main causes were the slump in the construction industry and a lack of project financing on the customer side, which increasingly led to the postponement or cancellation of investment projects. Accordingly, revenues of the Industrial Division declined in the first half of 2009 and amounted to € 275.2 million (previous year: € 299.9 million).
Raw Materials/Production Division As in the first quarter, the development in the Raw Materials/Production Division was characterised by low capacity utilisation and the related fixed cost deficit in the first half of 2009. Raw material prices recorded a largely stable development until mid-year.
Outlook Following a sharp drop in orders in the first half of 2009, first signs indicated a bottoming out of this development at a low level at mid-year. However, a first upward trend in the refractories industry cannot be expected before the beginning of the fourth quarter. 2009 will therefore be a difficult year for RHI. However, based on massive counteractive and restructuring measures, RHI expects to gain market share in this particularly difficult climate and to emerge stronger from the crisis than its competitors.
RHI will continue unabatedly to implement its programmes to cut costs and reduce working capital. Positive cost effects will increasingly have an effect on the result in the second half of the year. Moreover, marketing and sales activities are stepped up in all divisions. At present new customers are successfully won, especially in the emerging markets. RHI strives to maintain sale prices stable in the coming months.