RHI AG, the world market leader for refractory products, recorded a clear upward trend in revenues and a strong increase in earnings in the first quarter of 2010.
The Group’s revenues increased by 8.4% to € 342.2 million compared to the reference period of 2009 (Q1/2009: € 315.8 million). The Group’s EBIT soared by 124.8% to € 31.7 million compared to the first quarter of 2009 (Q1/2009: € 14.1 million). The EBIT margin more than doubled from 4.5% to 9.3%. The strong earnings development was attributable to better capacity utilisation, earnings effects of the cost optimisation programme implemented in 2009 and the fact that the new plant concept of RHI, which provides for maximum flexibility, is working.
RHI was able to fully benefit from the global positioning in the Steel and Industrial Divisions in the first quarter of 2010, with the Steel Division in particular recording substantial growth. Based on RHI’s good market position and growing demand product, prices remained stable.
Compared with the fourth quarter of 2009, the first quarter of 2010 showed a largely stable development. With revenues improving (Q4/2009: € 336.7 million), the operating result remained constant at € 33.6 million. In the fourth quarter of 2009, EBIT contained impairment losses and restructuring expenses of roughly € 11.5 million. In the first quarter of 2010 they amounted to € 1.9 million.
Moreover, all relevant balance sheet indicators improved as of 31 March 2010. Net debt was reduced to € 217.6 million versus € 233.2 million as of 31 December 2009. The equity ratio was raised from 17.9% as of 31 December 2009 to 20.0%. Cash and cash equivalents amounted to € 165.5 million (31 December 2009: € 139.8 million).
In early April 2010, RHI acquired a minority stake in one of the largest Russian refractories producers for the glass industry. This company operates a plant for fused cast bricks in Moscow and primarily supplies Russian customers.
|in € million
Pre-restructuring EBIT 2)
Pre-restructuring EBIT margin
Profit before income tax
Net cash flow from operating activities
Employees at 31 March
1) after restructuring
2) before impairment losses and restructuring expenses
Steel Division In the world steel market, the strong demand of the fourth quarter of 2009 continued at the beginning of 2010. Although the world steel output only grew by 4% in the first quarter of 2010 as compared to the fourth quarter of 2009, the Steel Division recorded above-average growth in RHI’s core markets in Europe as well as in the USA, Asia/Pacific and China. Full-line service contracts continued to achieve good success.
Overall, RHI increased revenues in the Steel Division by 32.4% to € 218.8 million in the first quarter of 2010 (Q1/2009: € 165.3 million). EBIT, at € 14.8 million, was very pleasing after it had still been negative at € 6.8 million in the first quarter of 2009 and amounted to € 10.0 million in the fourth quarter of 2009.
Industrial Division In the Industrial Division, the level of incoming orders varied greatly in terms of region and sector and was highly volatile, with the sluggish recovery of the global construction industry and persisting financial restraints for investments in the customer industries causing negative effects. Divisional revenues in the first three months of 2010, at € 117.3 million, fell short of the excellent prior-year-figure of € 145.9 million. EBIT amounted to € 14.8 million (Q1/2009: € 19.5 million), which corresponds to a very positive EBIT margin of 12.6% (Q1/2009: 13.4%).
Raw Materials Division Revenues of RHI’s Raw Materials Division rose by 7.8% in the first quarter of 2010 as a consequence of the improved demand by the Steel Division in comparison with the reference period of 2009. EBIT increased from € 1.4 million to € 2.1 million. The upward trend of raw material prices continued in the first quarter of 2010, though in a slightly weaker form than in 2009.
Outlook Assuming that the current development in the financial markets has no negative effects on the real economy, RHI expects a result for the second quarter of 2010, which should essentially match that of the first quarter of 2010.
Due to the market recovery, the ongoing expansion of the market position and the clearly improved cost structure compared with 2009, RHI is confident for the year 2010 to realise an increase in revenues and earnings in comparison with 2009.
Starting with the report on the first quarter of 2010, RHI adjusted the reporting structure to reflect the organisational changes implemented in 2009 as well as the internal reporting structure. For reasons of transparency and comparability, these reclassifications were also made retroactively for the years 2007, 2008 and 2009 as well as the reference period of 2009. Due to the comprehensive changes, RHI subjected the interim consolidated financial statements as of 31 March 2010 to a review by the auditor.