26 juli, 2006
08:00 CET
Rautaruukki Corporation Interim report January-June 2006
Rautaruukki Corporation Stock Exchange Release 26 July 2006 at 9.00
This interim report has been prepared in accordance with IAS 34 in conformity
with the accounting policies published in the 2005 financial statements.
Net sales and result for January-June 2006 (comparative figures for January-June
2005)
Consolidated net sales in January-June 2006 were EUR 1,784 million (1,953), a
decrease of 9 per cent. The units that transferred to Ovako were removed from
financial reporting as from 1 May 2005. Measured against comparable net sales in
January-June 2005 of EUR 1,701 million, the increase was 5 per cent. Net sales
were lifted by the good trend in sales by the solutions businesses as well as by
the acquisitions that were made. The solutions businesses accounted for 33 per
cent of net sales in the report period (24). Of net sales, 79 per cent (68) came
from the core market areas: 32 per cent from Finland (28), 34 per cent from the
other Nordic countries (31) and 13 per cent from central eastern Europe (9). The
rest of Europe accounted for 19 per cent (29) and other countries for 2 per cent
(3).
Construction activity grew in the second quarter of the year, and integrated
systems accounted for an increased share of Rautaruukki's sales. Order books in
the engineering industry have grown further, leading to an increase in
Rautaruukki's deliveries.
Deliveries of steel products declined by about 20 per cent compared with the
same period a year earlier. Eliminating the effect of the units transferred to
Ovako, deliveries were down by about 4 per cent. Average selling prices of
Rautaruukki's steel products in the report period were somewhat below the same
period of last year. Demand for steel products remained strong in Europe and
prices headed upward in the second quarter.
Operating profit in the report period was EUR 222 million (381; comparable
operating profit: 332). Operating profit was reduced by lower prices for steel
products and by higher raw material costs compared with the same period last
year. The share of the Group's operating profit attributable to the solutions
businesses rose to 34 per cent (20). Foreign exchange differences reduced
operating profit by a total of EUR 10 million (+11), of which the effect of the
US dollar, including hedging, was a loss of EUR 28 million (+17). The costs of
share bonus schemes booked to the report period came to about EUR 15 million
(17).
Net financial expenses amounted to EUR 13 million (19). Net interest expenses
were EUR 10 million (18).
The share of associate companies' profit was EUR 29 million (13), of which Ovako
accounted for EUR 26 million (12).
The result before taxes was EUR 237 million (376).
The Group's taxes totalled EUR 53 million (98), including a change in deferred
taxes of EUR -2 million (+8).
Operating profit for the report period was EUR 184 million (278).
Diluted earnings per share were EUR 1.33 (2.02).
Over the past twelve months, the return on capital employed was 24.1 per cent
(35.2) and the return on equity 25.5 per cent (41.3).
Balance sheet
The Group's total assets were EUR 2,908 million (2,701). Total assets increased
by EUR 125 million from the end of June of last year and by EUR 207 million from
the end of 2005. OOO Ventall, which was purchased in June, accounted for EUR 148
million of total assets.
Cash flow and financing
Cash flow from operating activities was EUR 139 million (258) and cash flow
after investing activities EUR 18 million (196). The change in the first-half
liquid funds was influenced by the payment of dividend, EUR 191 million, the
residual tax for 2005, EUR 67 million, and the purchase of Ventall, EUR 99
million.
Interest-bearing net debt at the end of June totalled EUR 538 million (661). At
the end of 2005, interest-bearing net debt stood at EUR 341 million. Working
capital increased by EUR 18 million in January-June (142).
The equity ratio was 53.2 per cent (47.3) and the gearing ratio 35.4 per cent
(50.5). At the end of June, the Group's liquid funds amounted to EUR 72 million
and it had a total of EUR 300 million of committed unused revolving credit
facilities with banks. Shareholders' equity stood at EUR 1,520 million at the
end of June (1,311), or EUR 11.12 per share (9.65). Total dividends of EUR 191
million that were declared by a resolution of the Annual General Meeting held in
March were paid out on 4 April 2006.
Personnel
The average number of personnel employed by the Group in the January-June period
was 12,645 (11,924) people. At the end of June the entire payroll numbered
14,952 employees (11,982). The change in the number of employees was an increase
of 2,970 people. The increase in personnel strength resulting from the
acquisitions carried out by the end of June 2006 was about 2,200 employees. In
2005, 1,900 Rautaruukki staff transferred to the employ of Ovako and 1,600
people were added to the Group payroll via acquisitions.
Structural changes in the Group
In the report period, four acquisitions were completed that increased
Rautaruukki's capabilities of delivering integrated systems to customers in the
construction industry, whilst further strengthening the company's project know-
how.
The acquisition of PPTH Steelmanagement Oy, the leading steel constructor in the
Nordic countries, was seen to completion in January 2006. The deal raised
Rautaruukki's holding in the company from 20 per cent to 100 per cent. The
shares were bought for a price of about EUR 7 million. As part of the deal,
Rautaruukki assumed EUR 24 million of interest-bearing liabilities. PPTH was
included in Rautaruukki's consolidated financial statements as from 1 January
2006.
The purchase of the Slovak steel constructor Steel-Mont a.s. was completed in
March. The shares were bought for a price of about EUR 10 million. The company
was debt-free. Steel-Mont was consolidated within Rautaruukki's accounts as from
1 April 2006.
In May, Rautaruukki purchased AZST-Kolor CJSC, which operates a colour coating
line in Ukraine, at a acquisition cost of EUR 5 million. The company was debt-
free. AZST-Kolor was consolidated within Rautaruukki's accounts as from 1 June
2006. The acquisition means that Rautaruukki has a competitive source of
ensuring its delivery accuracy and the availability of high-quality raw
materials, especially in Russia and Ukraine.
In June, Rautaruukki completed the acquisition of the Russian steel constructor
OOO Ventall, thereby strengthening its position in the fast-growing Russian
market. Ventall was included in Rautaruukki's consolidated financial statements
as from 30 June 2006. The shares were bought for a price of EUR 99 million. The
company was debt-free. Under the terms of the agreement, a provision for a
possible additional purchase price which is dependent on the earnings in 2006
and is a maximum of EUR 27.5 million was recorded on the acquisition cost. The
company will bring Rautaruukki a strong position in Russia's growing
construction market as well as a local manufacturing presence within steel
structures and sandwich panels.
Capital expenditure
Investments in tangible and intangible assets in January-June totalled EUR 59
million (67). Disposals of property, plant and equipment during the report
period amounted to EUR 4 million (7). Capital expenditure on the replacement of
production equipment in 2006 is estimated to come to about EUR 80 million and
outlays on special products and expanding processing capacity will be about EUR
60 million.
In the report period, spending on M&A arrangements totalled EUR 120 million. The
acquisitions increased the Group's interest-bearing net debt by EUR 30 million.
Via the acquisitions, the amount of property, plant and equipment increased by
EUR 44 million, working capital by EUR 19 million and goodwill by EUR 109
million.
Shares and share capital
The trading volume of the Rautaruukki Corporation share on the Helsinki Stock
Exchange in January-June was EUR 2,732 million (949). The share registered a
high of EUR 33.31 in March and a low of EUR 19.00 in June. The volume-weighted
average price was EUR 26.32. The price of the share at the end of the report
period on 30 June 2006 was EUR 23.62 and the company had a market capitalisation
of EUR 3,280 million (1,715).
The company's registered share capital at 30 June 2006 stood at EUR 236.1
million. The number of Series K shares issued was 138,886,445.
The warrants of the bond loan directed at Rautaruukki's personnel in 2003 were
admitted to public trading on the Helsinki Stock Exchange on 24 May 2006. The
warrants entitle their holders to subscribe for a maximum of 1,400,000 shares by
23 May 2009. The subscription price of the shares is EUR 2.00. As a consequence
of share subscriptions, the company's share capital can be increased by a
maximum of EUR 2,380,000.
Rautaruukki Corporation's Annual General Meeting held on 23 March 2006
authorised the Board of Directors to decide on buying back a maximum of
11,000,000 of the company's own Series K shares (7.92 per cent of the shares
outstanding). The Annual General Meeting furthermore authorised the Board of
Directors to decide on transferring a maximum of 13,592,697 Series K treasury
shares. Under the Board of Directors' existing authorisation, on 23 March 2006
the company transferred 291,000 of its own Series K shares (treasury shares)
without consideration to persons covered by the Group's share bonus scheme.
Following the transfer, the company had 2,301,697 treasury shares. The treasury
shares had a market value at 30 June 2006 of EUR 54 million.
In addition to the above, the Board of Directors does not have a valid
authorisation to issue convertible bonds and/or bonds with warrants or to
increase the company's share capital.
Environmental compliance
The EU's internal emissions trading scheme, which was launched in 2005, includes
the following Rautaruukki sites: in Finland, the Raahe Steel Works and the steam
boilers of the Hämeenlinna Works. In Norway, a similar system has been
developed, and it covers the Mo i Rana Steel Works and rolling mills.
In the initial allocation of free emission rights, Rautaruukki received a total
of about 15.4 million tonnes for the period 2005-2007. The confirmed volume of
carbon dioxide emissions for 2005 was 4.83 million tonnes. Last year the
company's steel production was adjusted in line with profitable demand, thereby
also lowering carbon dioxide emissions. The difference between emission rights
according to the initial allocation and actual emissions will be determined
finally only after the close of the three-year period from 2005 to 2007. At this
stage, however, it is not estimated that the purchase of emission rights will
result in significant costs to the company's steel production from the
standpoint of overall operations.
Improvements in cost-effectiveness
Cost savings under the Ruukki United programme aiming at harmonising and
enhancing the company's ways of working are expected to contribute about EUR 150
million to consolidated operating profit by the end of 2008. About EUR 70
million worth of projects has been identified by the end of 2006, of which EUR
25 million had been implemented by the end of the report period.
The objective of the Ruukki United programme is to free up permanently about EUR
150 million of capital by the end of 2008. About half of the programme to reduce
tied-up capital had already been realised by the end of the report period.
The effects which the programmes will have on staffing levels are to be
ascertained on a project-specific basis, and the reductions are expected to be
made primarily by way of retirement and relocation.
Divestment of the steel reinforcement business
In April, Rautaruukki signed an agreement on the sale of its Nordic steel
reinforcement business to BT Norway AS. The shares were sold for a price of
about EUR 123 million, including the dividend to be paid to Rautaruukki before
the time of completion of the sale. The purchase price corresponds to the
carrying amount of the companies to be sold. The final purchase price will be
determined on the basis of the balance sheet of the divested companies at the
time of completion of the transaction.
The divestment will streamline Rautaruukki's structure and is connected to the
arrangements that were launched last year for divesting the long steel products
business. The steel reinforcement business is part of the Ruukki Metals division
and it comprises Fundia Armeringsstål AS and Fundia Armering AS in Norway,
Fundia Betoniteräkset Oy in Finland, Fundia Armering AB in Sweden and Fundia
Armering A/S in Denmark. Net sales in 2005 were about EUR 328 million and the
business generated operating profit of EUR 30 million. The company had a payroll
of 689 employees at the end of 2005. The divestment is contingent on the
required regulatory approvals and it is expected to be completed by the end of
July 2006.
Events after the close of the report period
Rautaruukki, SKF and Wärtsilä signed an agreement in July on the sale of the
operating companies of their associated company Oy Ovako Ab. Ovako's debt-free
selling price is about EUR 700 million. The total price for the shares is about
EUR 660 million, comprising a cash payment at closing of approximately EUR 535
million, a deferred cash payment of EUR 15 million to be paid in July 2008 and
an interest-bearing vendor note of EUR 110 million to be paid within 3-6 years
from closing. In addition, the buyer will assume estimated net debt of EUR 40
million at closing. Rautaruukki owns 47.0 per cent of Ovako. As a consequence of
carrying out the transaction and the subsequent dissolution of Oy Ovako Ab,
Rautaruukki will book a tax-free capital gain of about EUR 100 million on the
transaction. Completion of the deal calls for regulatory approvals and it is
expected to be consummated during September 2006.
In July, Rautaruukki sold its steel service centre business located in Duisburg,
Germany, which primarily prefabricates sheet metal products. The steel service
centre and the approximately 75 people on its payroll will transfer to the
purchaser's employ on 1 September 2006. The deal fits in with Rautaruukki's
strategy whereby Ruukki Metals will concentrate on selling special products in
the markets of central and southern Europe, and will develop distribution
channels that support this.
Near-term outlook
The market situation in the Group's core market areas and main customer
industries has held up well. The construction season is under way and customers
in the engineering industry still have strong order books. Demand is expected to
remain firm within the construction and the engineering industries, and prices
of steel products are set to strengthen further in the latter half of the year.
Costs of the raw materials used in steel manufacture are estimated to remain at
the level seen in the second half of 2005.
Full-year consolidated net sales in 2006 are expected to increase on the
comparable net sales in 2005. In the latter half of the year, operating profit
is estimated to be clearly better compared with the same period in 2005. In
addition, the Ovako arrangement - when completed - will bring Rautaruukki a tax-
free capital gain of about EUR 100 million. Cash flow will improve remarkably
due to divestments of reinforcing steel business and Ovako. The most significant
factors of uncertainty relate to movements in the steel product markets in Asia
and to the general trend in the world economy.
This Interim Report has not been audited.
Helsinki, 26 July 2006
Rautaruukki Corporation
Board of Directors
DIVISIONS
Ruukki Construction
EUR million I/05 II/05 III/05 IV/05 2005 I/06 II/06
Net sales 88 137 170 155 550 133 181
Operating profit 9 22 39 17 86 8 21
- % of net sales 10 16 23 11 16 6 12
In January-June 2006, Ruukki Construction had net sales of EUR 315 million
(225), up 40 per cent on the same period of 2005. Net sales growth was driven
not only by acquisitions, but also by the rise in the proportion of integrated
systems. The division's share of consolidated net sales was 18 per cent (12).
Operating profit was EUR 29 million (31). The profitability of the period was
influenced by the rise in the price of zinc used in colour coated products that
has not yet fully been transferred to product prices. On the other hand, PPTH
which was acquired at the beginning of the year has not yet reached the targeted
profitability level.
Within construction, there was good demand for components, systems and
integrated systems, and deliveries increased in all market areas. In the Nordic
countries and the Baltic area, sales of components have held up well and
integrated systems have grown in volume. Deliveries for infrastructure
construction projects in the Nordic countries have likewise shown continued
strength. There has been buoyant growth in central eastern Europe, especially
for integrated systems, bolstered in large measure by the acquisitions and new
capital expenditure projects that have been carried out. In Russia and Ukraine,
systems and integrated systems represent an increased share of sales, alongside
sales of components.
Two acquisitions were completed in the first quarter, bringing an increase in
Ruukki's manufacturing know-how within steel structures and significantly
strengthening Ruukki's design and project expertise in the construction
industry. PPTH, the leading steel constructor in the Nordic countries, was made
a part of Ruukki Construction as from 1 January 2006, and Slovakia's leading
steel constructor, Steel-Mont, was added to the division on 1 April 2006.
In May, Rautaruukki acquired AZST-Kolor, which operates a colour coating line in
city of Antratsit, Ukraine. The purchase of AZST-Kolor serves Ruukki's customers
in the construction industry, especially in the growing markets of Russia and
Ukraine. Via the acquisition, Ruukki has secured a competitive means of ensuring
its delivery reliability and the availability of high-quality raw materials.
In June, Rautaruukki completed the acquisition of OOO Ventall, Russia's leading
steel constructor. Ventall was included in Rautaruukki's financial reporting as
from 30 June 2006. Ventall is a strategically important step in expanding the
solutions businesses. The company brings Ruukki a strong position in Russia's
growing construction market as well as a local manufacturing presence within
steel structures and sandwich panels. Ruukki's and Ventall's design expertise in
the area of steel structures and their mutually complementary construction
components will bring a significant increase in Ruukki's service capability in
key customer segments in Russia and they will also support growth in Ukraine.
In June, a new production plant went into operation in Hungary. The new plant
will strengthen significantly Ruukki's delivery capability of main construction
components and improve its service capability for integrated deliveries in
unison with the acquisitions that have been carried out in the strategically
important central eastern Europe market area.
Ruukki Engineering
EUR million I/05 II/05 III/05 IV/05 2005 I/06 II/06
Net sales 124 114 101 137 476 132 142
Operating profit 22 23 23 27 96 25 21
- % of net sales 18 21 23 20 20 19 15
In January-June 2006, Ruukki Engineering had net sales of EUR 274 million (238),
an increase of 15 per cent on the same period of 2005. Comparable net sales in
January-June 2005 amounted to EUR 209 million. Compared with this figure, growth
in the first half of 2006 was 31 per cent. The higher net sales were
attributable both to the continued good market situation and the acquisition of
Syneco Industri AB that was made towards the end of 2005. The division's share
of consolidated net sales was 15 per cent (12; comparable basis: 12). Operating
profit was EUR 46 million (46, comparable basis: 44). Due to long-term contracts
the product price increases have not yet compensated the rise in raw material
costs.
Order books have strengthened further in all of Ruukki Engineering's customer
industries. Customers in the lifting, handling and transportation equipment
industry had a strong order intake, and this was reflected in the good demand
for deliveries by Ruukki. Demand in the paper and wood processing industries has
held up well and there has been good growth in the wind power plant market. In
the marine and offshore industry as well, the order intake is at a very good
level.
Demand for parts, components and systems supplied by Ruukki Engineering has
continued to grow. Manufacturing capacity is being beefed up in line with the
increased demand and with an eye to boosting production efficiency. The Kurikka
plant is moving its machine cabin production to the new production facilities
that were completed in April, lifting machine cabin production capacity by about
a third. A production expansion project was also launched at the plant in
Wroclaw, Poland.
The steel service centre that went into operation in Raahe last year has
continued to expand its operations. Quenching capacity for steel plates will be
raised at the production in order to ramp up deliveries of components made from
high-strength steels.
Ruukki Metals
EUR million I/05 II/05 III/05 IV/05 2005 I/06 II/06
Net sales 802 686 541 596 2625 591 604
Operating profit 180 147 69 91 486 77 87
- % of net sales 22 21 13 15 19 13 14
Ruukki Metals' net sales in January-June 2006 totalled EUR 1,195 million
(1,488). Net sales were down 20 per cent, due largely to the non-inclusion in
the division's figures, as from 1 May 2005, of the units that were transferred
to Ovako. Comparable net sales in January-June 2005 amounted to EUR 1,264
million. Compared with this figure, the decrease in net sales in the first
quarter of 2006 was 5 per cent. This was due mainly to the decrease in
deliveries compared with the high level seen last year. The division accounted
for 67 per cent of consolidated net sales (76; comparable basis: 74). Operating
profit was EUR 164 million (326; comparable basis: 279). The drop in
profitability was attributable to the clear rise in raw material costs and to
the somewhat lower price level of steel products.
Demand for steel products has been buoyant in the main customer industries in
all the core markets. Wholesalers' stock levels have decreased further and are
in part already at a lower than normal level. Strong demand in the Nordic
countries, accompanied by dips and peaks from product to product, has led to
delivery difficulties for certain products. The surge in construction activity
in central eastern Europe has fuelled demand for coated sheet products in
particular. Special products made up an increased share of total deliveries.
Improvement of the sales structure is continuing in the west European market,
with a greater emphasis on deliveries of special products. Accordingly, in July
Rautaruukki divested its steel service centre business located in Duisburg,
Germany, which primarily prefabricates sheet metal products. The steel service
centre and the approximately 75 people on its payroll will transfer to the
purchaser's employ on 1 September 2006.
Ruukki is continuing to strengthen and develop its network of steel service
centres in the Nordic countries, the Baltic area and Russia.
Investments in increasing the delivery capability for ultra high-strength steels
are progressing according to plan. A new laser cutting line for large hollow
sections will go into operation at the steel service centre in Hyvinkää by the
end of the year.
Ruukki Production
1000 tonnes I/05 II/05 III/05 IV/05 2005 I/06 II/06
Steel production 1176 982 765 888 3813 888 860
- excluding Ovako 883 897 765 888 3434 888 860
Steel output in January-June was 1,748,000 tonnes. The comparative figure for
2005, excluding the units transferred to Ovako, was 1,780,000 tonnes. Output in
the current year was reduced by the repair that was made in June to the charging
equipment for the blast furnace in Raahe.
Prices of raw materials for ironmaking have been agreed for the current year and
partly for next year. All in all, ironmaking raw material costs are estimated to
remain at the level of the second half of last year. The price of zinc used in
steel coating is about double that of last year. 40,000 tonnes of zinc is used
annually. The hedging measures that have been taken out will dampen the effect
on costs of fluctuations in the market price.
Investments aimed at strengthening the delivery capability for special products
are moving ahead according to plan. A new coiler will go into operation at the
hot strip rolling mill in August. Likewise in August, preparatory works will be
carried out so that the direct quenching equipment at the plate rolling mill can
go into full production use in summer 2007. A decision has been taken to
increase the ladle metallurgy capacity at the Raahe Steel Works. The equipment,
which will bring a significant increase in the proportion of demanding special
steels, will be completed during 2008.
In May, Rautaruukki acquired AZST-Kolor, which operates a colour coating line in
the city of Antratsit, Ukraine. The line has a colour coating capacity of 80,000
tonnes a year. Start-up of production on the colour coating line is under way.
TABLES
Individual figures and grand totals presented in the tables have been rounded
off to full millions of euros from exact figures, which mean that when added
together or subtracted they will not always tally. The figures in the tables are
unaudited.
CONSOLIDATED PROFIT AND LOSS ACCOUNT (CONDENSED)
EUR million 4-6/06 4-6/05 1-6/06 1-6/05 2005
Net sales 928 939 1784 1953 3654
Other operating income 6 -3 10 12 28
Operating expenses -770 -716 -1499 -1503 -2908
Depreciation -37 -39 -74 -81 -156
Operating profit 127 180 222 381 618
Financing income and expenses -7 -10 -13 -19 -30
Share of results in
associated companies 16 12 29 13 23
Profit before taxes 136 182 237 376 612
Taxes -29 -49 -53 -98 -157
Net profit 106 133 184 278 455
Attributable to:
Equity holders of the company 106 133 184 278 455
Minority interest 0 0 0 0 0
Diluted earnings per share, e 0.77 0.97 1.33 2.02 3.31
Basic earnings per share, e 0.78 0.98 1.35 2.04 3.35
Operating profit, % of net sales 13.7 19.2 12.4 19.5 16.9
CONSOLIDATED BALANCE SHEET (CONDENSED) 2006 2005 2005
EUR million 30 Jun 30 Jun 31 Dec
ASSETS
Non-current assets 1549 1503 1476
Current assets
Inventories 499 605 534
Trade and other receivables 595 613 528
Cash and cash equivalents 46 63 163
Non-current assets held for sale* 218
2908 2783 2701
EQUITY AND LIABILITIES
Equity
Capital attributable to the
Company's equity holders 1519 1310 1497
Minority interest 1 1 1
Non-current liabilities
Interest bearing 334 440 372
Other 215 235 194
Current liabilities
Interest bearing 271 284 132
Trade creditors and other liabilities 501 513 505
Liabilities related to non-current
assets held for sale* 66
2908 2783 2701
* As non-current assets held for sale, the Group has classified the Nordic
reinforcing steel business, Duiburg service center and Metalplast Systems, of
which Rautaruukki has signed agreements to sell. Non-current assets held for
sale include EUR 26 million cash and cash equivalents.
CASH FLOW STATEMENT (CONDENSED)
EUR million 1-6/06 1-6/05 1-12/05
Net profit 184 278 455
Adjustments 111 199 333
Cash flow before working capital changes 295 477 788
Change in working capital -18 -142 0
Financing items and taxes -138 -77 -137
Cash flow from operations 139 258 652
Cash flow from investing activities -121 -62 -133
Cash flow before financing 18 196 519
Dividends paid -191 -109 -109
Other net cash flow from financing 83 -84 -307
Change in cash and cash equivalents -91 3 103
KEY FIGURES 4-6/06 4-6/05 2005
Net sales, Me 928 939 3654
Operating profit, Me 127 180 618
Operating profit, % of net sales 13.7 19.2 16.9
Profit before taxes, Me 136 182 612
Earnings per share, diluted, e 0.77 0.97 3.31
KEY FIGURES 1-6/06 1-6/05 2005
Net sales, Me 1784 1953 3654
Operating profit, Me 222 381 618
- % of net sales 12.4 19.5 16.9
Profit before taxes, Me 237 376 612
- % of net sales 13.3 19.2 16.7
Net profit, Me 184 278 455
- % of net sales 10.3 14.2 12.5
Return on capital employed*, % 24.1 35.2 32.8
Return on equity *, % 25.5 41.3 34.7
Equity ratio, % 53.2 47.3 56.0
Gearing ratio, % 35.4 50.5 22.8
Interest-bearing net debt, Me 538 661 341
Equity per share, e 11.12 9.65 10.98
Personnel on average 12,645 11,924 11,684
Number of shares 138,886,445 138,886,445 138,886,445
- not counting own shares 136,584,748 135,813,485 136,293,748
- diluted, average 137,853,798 137,213,485 137,377,120
* Based on previous 12 months
STATEMENT OF CHANGES IN EQUITY 1-6/2006
EUR million
Attributable to equity holders of the Company
ShareFair value Trans- Re-
Share premium and lation tained Minority
capital account other differ- earn- Total interest
reserves ences ings
EQUITY 1.1. 236 220 31 -5 1016 1497 1
Cash flow hedging
Increase (hedging reserve) 32 32
Deferred taxes -8 -8
Share-based compensation 2 2
Treasury shares granted -3 2 0
Change in translation
difference 4 4
Dividend distribution -191 -191
Net profit 184 184
EQUITY 30.6. 236 220 55 -1 1009 1519 1
STATEMENT OF CHANGES IN EQUITY 1-6/2005
EUR million
Attributable to equity holders of the Company
ShareFair value Trans- Re-
Share premium and lation tained Minority
capital account other differ- earn- Total interest
reserves ences ings
EQUITY 1.1. 236 220 4 -2 670 1126 1
Cash flow hedging
Increase (hedging reserve) 19 19
Deferred taxes -5 -5
Change in translation
difference -4 -4
Share-based compensation 2 2
Dividend distribution -109 -109
Net profit 278 278
EQUITY 30.6. 236 220 21 -6 839 1310 1
NET SALES BY DIVISION
Me 1-6/06 1-6/05 1-12/05
Ruukki Construction 315 225 550
Ruukki Engineering 274 238 476
Ruukki Metals 1195 1488 2625
Other units 2 2 3
Consolidated net sales 1784 1953 3654
OPERATING PROFIT BY DIVISION
Me 1-6/06 1-6/05 1-12/05
Ruukki Construction 29 31 86
Ruukki Engineering 46 46 96
Ruukki Metals 164 326 486
Group management and other units -17 -22 -50
Consolidated operating profit 222 381 618
NET SALES BY QUARTER
Me I/05 II/05 IlI/05 IV/05 I/06 II/06
Ruukki Construction 88 137 170 155 133 181
Ruukki Engineering 124 114 101 137 132 142
Ruukki Metals 802 686 541 596 591 604
Other units 0 2 0 1 0 1
Consolidated net sales 1014 939 812 889 856 928
OPERATING PROFIT BY QUARTER
Me I/05 II/05 III/05 IV/05 I/06 II/06
Ruukki Construction 9 22 39 17 8 21
Ruukki Engineering 22 23 23 27 25 21
Ruukki Metals 180 147 69 91 77 87
Group management and other units -10 -12 -17 -11 -15 -2
Consolidated operating profit 201 180 114 123 95 127
NET SALES BY QUARTER (PRO FORMA) EXCLUDING UNITS
TRANSFERRED TO OVAKO
Me I/05 II/05 III/05 IV/05 I/06 II/06
Ruukki Construction 88 137 170 155 133 181
Ruukki Engineering 103 107 101 137 132 142
Ruukki Metals 632 633 541 596 591 604
Other units 0 2 0 1 0 1
Consolidated net sales 822 878 812 889 856 928
OPERATING PROFIT BY QUARTER (PRO FORMA) EXCLUDING UNITS
TRANSFERRED TO OVAKO
Me I/05 II/05 III/05 IV/05 I/06 II/06
Ruukki Construction 9 22 39 17 8 21
Ruukki Engineering 21 24 23 27 25 21
Ruukki Metals 143 135 69 91 77 87
Group management and other units -10 -12 -17 -11 -15 -2
Consolidated operating profit 163 169 114 123 95 127
NET SALES BY AREA
% of net sales 1-6/06 1-6/05 1-12/05
Finland 32 28 29
Other Nordic countries 34 31 30
Central eastern Europe 13 9 12
Other western Europe 19 29 26
Other countries 2 3 3
CONTINGENT LIABILITIES 2006 2005 2005
Me 30 Jun 30 Jun 31 Dec
Mortgaged real estates 34 27 29
Given as pledges 18 0 19
Collateral given on behalf of
associated companies 2 17 3
others 2 6 2
Leasing and rental liabilities 135 149 141
Other financial liabilities 4 1 4
VALUES OF DERIVATIVE CONTRACTS 30 June 2006
Me
Cash flow hedges included
in hedge accounting Nominal value Fair value
Interest rate derivatives
Interest rate swaps 25 0.2
Zinc derivatives
Forward contracts 39,750* 34.0
Electricity derivatives
Forward contracts 2,574** 33.4
* tonnes
** GWh
The unrealised profit/loss of the cash flow hedges are booked to equity, if the
hedge is effective. Other fair value changes are booked to profit and loss.
Derivatives not included
in hedge accounting Nominal value Fair value
Interest rate derivatives
Interest rate swaps 100 0.6
Foreign currency derivatives
Forward contracts 621 -2.8
Options
Boughts 35 -0.4
Sold 35 0.1
70 -0.3
CHANGES IN PROPERTY, PLANT AND EQUIPMENT
Me 1-6/06 1-6/05 1-12/05
Book value at the beginning of the period 1033 1192 1192
Increases 52 33 84
Increases through acquisitions 42 12 19
Decreases -2 -7 -15
Decreases through divestments 0 -102 -105
Depreciation -68 -78 -144
Exchange differences 0 -4 4
Book value at the end of the period 1057 1046 1033
TRANSACTIONS WITH RELATED PARTIES (ASSOCIATED COMPANIES)
Me 1-6/06 1-6/05 1-12/05
Sales to associated companies 16 29 59
Purchases from associated companies 38 40 56
Non-current receivables
at the end of the period 0 40 39
Trade receivables and other receivables
at the end of the period 8 72 13
Trade creditors and other liabilities
at the end of the period 9 14 6
INVESTMENT COMMITMENTS* after
Me 30 June 2006
Maintenance investments 43
Development investments and outlays
on special products 78
Total 122
*Investment commitments include the estimated costs of projects that have
received a go-ahead permit.
INFORMATION ON ACQUISITIONS*
Me
Acquisition cost 149
including conditional purchase price 29
Acquired entities' assets and liabilities (book value)
Non-current assets 44
Current assets
Inventories 25
Trade receivables and other receivables 34
Cash and cash equivalents 8
Total assets 111
Non-current liabilities
Interest-bearing 23
Other 2
Current liabilities
Interest-bearing 7
Other 39
Total liabilities 69
Goodwill from acquisitions 109
* Includes following acquisitions: PPTH Steelmanagement Oy, Steel-Mont a.s.,
AZST-Kolor CJSC and OOO Ventall.
The acquisitions have been recorded on a preliminary basis in the manner
permitted under IFRS 3. The determination of the fair value of assets and
liabilities is still incomplete when the interim report is published.
ADDITIONAL INFORMATION
Sakari Tamminen, President and CEO, tel. +358 20 592 9075
Mikko Hietanen, CFO, tel. +358 20 592 9030
Rautaruukki Corporation
Taina Kyllönen
VP, Corporate Communications
Rautaruukki supplies metal-based components, systems and integrated systems to
the construction and mechanical engineering industries. The company has a wide
selection of metal products and services. The company has operations in 23
countries and employs 12,000 people. Net sales in 2005 totalled EUR 3.7
billion. The company's share is quoted on the Helsinki Exchanges (Rautaruukki
Corporation: RTRKS). The Corporation has used the marketing name Ruukki since
2004.
www.ruukki.com