23 april, 2008
08:00 CET
Rautaruukki Corporation's Interim report for January-March 2008
Rautaruukki Oyj Interim Report 23 April 2008 at 9
Continued good demand, outlook unchanged
Summary of first quarter 2008 results (comparable figures for 2007)
- Net sales EUR 939 million (comparable 927, reported 950)
- Operating profit EUR 143 million (comparable 179, reported 178)
- Return on capital employed 28.5 per cent (32.6, excluding impact of Ovako
capital gain)
- Earnings per share (diluted) EUR 0.77 (0.95)
- Comparable net sales growth is expected to meet the target and exceed 10 per
cent.
- Operating profit in 2008 is expected to be higher than in 2007.
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| KEY FIGURES | Q1/ | Q1/ | Q1/2007 | Q4/ | 2007 |
| | 2008 | 2007* | | 2007 | |
--------------------------------------------------------------------------------
| Net sales, EUR m | 939 | 927 | 950 | 982 | 3 876 |
--------------------------------------------------------------------------------
| Operating profit, EUR m | 143 | 179 | 178 | 120 | 637 |
--------------------------------------------------------------------------------
| as % of net sales | 15.2 | 19.3 | 18.7 | 12.2 | 16.4 |
--------------------------------------------------------------------------------
| Profit before taxes, EUR m | 140 | | 177 | 109 | 621 |
--------------------------------------------------------------------------------
| Earnings per share, | 0.77 | | 0.95 | 0.57 | 3.31 |
| diluted, EUR | | | | | |
--------------------------------------------------------------------------------
| Return on capital | 28.5 | | 32.6** | | 29.6 |
| employed, % | | | | | |
--------------------------------------------------------------------------------
| Gearing ratio, % | -3.6 | | -1.4 | | 1.4 |
--------------------------------------------------------------------------------
| Personnel, average | 14 622 | | 13 258 | | 14 715 |
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| * The comparable figures exclude the Ruukki Betonstahl GmbH and Ruukki |
| Welbond BV units, which were part of the Group until November 2007. |
| ** Excluding Ovako capital gain. |
--------------------------------------------------------------------------------
First quarter 2008 highlights:
- Good demand continued for non-residential construction in Northern Europe,
Russia, Ukraine and Poland during the first quarter. Demand for infrastructure
construction also continued good for road and railway construction and
foundation construction.
- Significant contracts to deliver steel structures and solutions in Russia and
the Nordic countries.
- The order books of engineering customers have remained strong. The demand was
brisk especially in the energy industry.
- Ruukki Engineering launched a profitability improvement programme aimed at
improving the division's operating profit by around EUR 20 million in 2008.
- Good demand for steel products. Driven by strong demand, special products
continued to form an increasing share of Ruukki Metals' net sales to account for
28 per cent (23).
President & CEO Sakari Tamminen comments on the first quarter results:
-The favourable market situation in the company's core market areas and main
customer industries continued during the first three months of the year. Demand
for non-residential construction was good, albeit a colder winter than a year
earlier in Central Eastern Europe decreased sales volumes in this market area
year on year. Residential construction slowed in the Nordic countries and
Baltics. The order books of engineering customers are strong and this was also
reflected in the demand within Ruukki Engineering. There was good demand for
steel products, especially for plate and special steel products.
Ruukki Construction and Ruukki Engineering increased their share of the
company's net sales year on year as a result of investments and acquisitions.
Strong demand for special products clearly increased the percentage of net sales
of these products within Ruukki Metals. We will continue to invest to enhance
the delivery capacity of special products.
Rautaruukki has launched extensive investments to increase production capacity
in the rapidly growing Russian and Central Eastern European markets. This will
strengthen our position in non-residential construction. The building of new
production lines and growing headcount added to costs during the first quarter.
The company's operating profit decreased compared to strong performance year on
year, but improved compared to the last quarter of 2007.
Higher than expected increases in the price of raw materials on the world market
will add considerably to our own steel production costs during the current year.
To offset growing costs, price increases will be implemented and cost-efficiency
improved.
Brisk demand in the company's main customer industries and a strong balance
sheet provide us with a good platform to grow our business in our core market
area both through investments and acquisitions. We expect comparable net sales
growth in 2008 to meet the target and to exceed 10 per cent. Operating profit in
2008 is expected to be higher than in 2007.
Press conference
Rautaruukki will hold a conference for analysts and the press on the first
quarter results on 23 April 2008 at 10.30am at Ruukki, Suolakivenkatu 1, 00810
Helsinki.
Webcast and conference call
The English webcast and conference call for investors and analysts can be viewed
live on the company's website at www.ruukki.com/investors, today 23 April 2008
at 14.00 Finnish time.
To attend the conference call, please call +44 (0) 20 7162 0025, password:
Rautaruukki, about 5-10 minutes before the conference starts. The replay can be
heard until 28 April on +44 (0) 20 7031 4064, access code: 792282.
The first quarter 2008 results may be viewed on the company's website at
www.ruukki.com/investors.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Sakari Tamminen, President & CEO, tel. +358 20 592 9075
Anne Pirilä, SVP, Corporate Communications and Investor Relations, tel. +358 20
592 8802
Rautaruukki Corporation
Anne Pirilä
SVP, Corporate Communications and Investor Relations
Rautaruukki supplies metal-based components, systems and integrated systems to
the construction and engineering industries. The company has a wide selection of
metal products and services. Rautaruukki has operations in 24 countries and
employs 14,600 people. Net sales in 2007 totalled EUR 3.9 billion. The company's
share is quoted on the OMX Nordic Exchange Helsinki (Rautaruukki Oyj: RTRKS).
The Corporation uses the marketing name Ruukki.
www.ruukki.com
DISTRIBUTION
OMX Nordic Exchange Helsinki
Main media
www.ruukki.com
RAUTARUUKKI CORPORATION INTERIM REPORT JANUARY-MARCH 2008
The good market situation in the Group's core market areas and main customer
industries continued during the first quarter.
Demand for non-residential construction was good in Northern and Eastern Europe.
A colder winter than a year earlier weakened demand for non-residential
construction in the Central Eastern European market. Good demand for
infrastructure construction continued across the company's market area.
The order books of engineering customers have remained strong and this has been
reflected in higher demand. There was good demand both for standard and special
steel products in the company's most important customer industries.
Net sales during January-March
Unless otherwise stated, the comparable figures in brackets refer to the same
period a year earlier.
The Group's net sales during January-March 2008 increased by EUR 12 million to
EUR 939 million (927). The comparable figures exclude Ruukki Betonstahl GmbH and
Ruukki Welbond BV, which were part of the Group until November 2007. The Group
reported net sales of EUR 950 million for January-March 2007. The solutions
businesses - Ruukki Construction and Ruukki Engineering - increased their share
of the company's net sales to 44 per cent (41) during the report period.
Ruukki Construction's net sales grew by 6 per cent to EUR 225 million (213) on
the comparable figure and Ruukki Engineering's by 13 per cent to EUR 188 million
(167). Ruukki Metals' net sales were EUR 525 million (547).
Of net sales, 83 per cent (83) came from Rautaruukki's core market areas: 33 per
cent (31) from Finland, 32 per cent (34) from the other Nordic countries and 18
per cent (18) from Central Eastern Europe, Russia and Ukraine. The rest of
Europe accounted for 15 per cent (16) of net sales and other countries for 3 per
cent (2).
Operating profit for January-March
Operating profit for the report period was EUR 143 million (178), which is 15
per cent (19) of net sales.
Since the beginning of 2008, the accounting principle for segment information
has been revised so that Ruukki Metals division is responsible for the costs
arising from the unutilised capacity of Rautaruukki's own steel production. The
comparable segment information for 2007 has been adjusted to comply with the new
accounting principle.
The solutions businesses accounted for 37 per cent (37) of the company's
operating profit: Ruukki Construction's operating profit was EUR 21 million (34)
and Ruukki Engineering's EUR 32 million (32). Ruukki Metals' operating profit
was EUR 97 million (119).
For Ruukki Construction, the first quarter of the year is typically the
quietest. A colder winter than during the previous year in Central Eastern
Europe meant less construction. This explains the year-on-year decrease in sales
volumes in this market area. The division's first quarter results were also
affected by an investment programme to expand capacity. This led to higher costs
from start-up operations and building the organisation. The investments will be
completed in stages during the course of 2008-2009.
Ruukki Engineering's operating profit was similar to the comparable figure in
2007 but improved compared to the previous quarter. Higher sales prices and the
strong market situation in the energy industry contributed to profitability
during the report period. The impact of the division's profitability improvement
programme, launched in February, will be seen in the form of improved
performance during the second half of the year.
Within Ruukki Metals, special products continued to account for a growing share
of net sales and add to profitability. Stocks of standard steel products were
back to normal at the start of the report period.
Net finance expense and exchange rate differences totalled EUR 4 million (2).
The share of associates' results was EUR 1 million (1).
The company's profit before taxes was EUR 140 million (177).
Group taxes were EUR 34 million (45), which include a change of EUR 2 million in
deferred tax (-4). The Group's effective tax rate was 26 per cent (26).
Profit for the report period was EUR 106 million (131).
Diluted earnings per share were EUR 0.77 (0.95).
Return on capital employed over the past 12 months was 28.5 per cent (32.6) and
return on equity was 23.2 per cent (29.7). The comparable figures exclude the
impact of the capital gain on the divestment of Ovako.
Balance sheet
The consolidated balance sheet total was EUR 3,034 million, which is EUR 80
million lower than at 31 March 2007 and EUR 172 million higher than at year-end
2007. The rise was attributable to higher cash and cash equivalents and trade
receivables, and an increase in non-current assets.
Shareholders' equity at 31 March 2008 was EUR 2,078 million (1,663) and net debt
EUR -75 million (-23).
Cash flow and financing
Cash flow from operating activities was EUR 152 million (71) and cash flow after
investing activities was EUR 103 million (45). Working capital decreased by EUR
7 million during January-March (increased EUR 100 million).
Net interest-bearing liabilities at 31 March 2008 were EUR -75 million (-23) Net
interest-bearing liabilities at year-end 2007 were EUR 28 million.
The equity ratio was 69.6 per cent (54.5) and net gearing -3.6 per cent (-1.4).
At 31 March, the Group had liquid assets of EUR 293 million and undrawn
committed revolving credit facilities totalling EUR 300 million. Shareholders'
equity at 31 March 2008 was EUR 2,078 million (1,663) or EUR 15.0 per share
(12.0).
Headcount increased by 10 per cent
During the first three months of 2008, the Group employed an average of 14,622
(13,258) people. At 31 March, the headcount was 14,706 (13,348). Personnel
numbers grew especially in Central Eastern Europe.
Changes in Group structure
Acquisition of German engineering company Wolter Metallverarbeitung GmbH:n
(Wolter) in February 2008 supports Rautaruukki's growth strategy in the lifting,
handling and transportation equipment industry. Acquisition of Wolter has
expanded Rautaruukki's range of products with telescopic booms for mobile crane
manufacturers and with booms for special heavy cranes used in the installation
of windmill towers.
Capital expenditure
Capital expenditure on tangible and intangible assets in January-March amounted
to EUR 49 million (26). During the report period, divestments of property, plant
and equipment amounted to EUR 1 million (3). Capital expenditure in 2008 is
expected to exceed EUR 250 million.
A decision was taken in January to strengthen delivery capability in the Nordic
and Baltic non-residential construction markets by building a new sandwich panel
plant in Finland. The total investment is worth around EUR 20 million and
includes a new production plant, which, when completed in autumn 2009, will
double panel output in Finland to over 2 million square metres.
New finishing capacity for special steel products will come on stream in stages
during 2008. In the second quarter of the year, a plasma cutting machine and for
high-strength plate products in particular, as well as the commissioning of the
first stage of a new steel ladle treatment unit, will increase the production
capacity of high-strength and wear-resistant steels and components. These
investments are worth around EUR 23 million in total.
During the report period, EUR 2 million was spent on M&A arrangements. Through
acquisitions, property plant and equipment obtained increased by EUR 4 million
and goodwill by EUR 2 million.
Annual General Meeting 2008
Rautaruukki Corporation held its Annual General Meeting in Helsinki on 2 April
2008.
The Meeting approved the payment of a dividend for 2007 of EUR 1.70 and an
additional dividend, from funds freed from the divestment of the long steels
business, of EUR 0.30 per share to make a total dividend of EUR 2.00 per share.
The total dividend payout of EUR 277 million was paid on 16 April 2008.
The Annual General Meeting reappointed Mr Jukka Viinanen and Mr Reino Hanhinen
as chairman and deputy chairman respectively of the Board of Directors.
President and CEO Maarit Aarni-Sirviö, CEO Christer Granskog, Pirkko Juntti LLM,
Undersecretary of State Kalle J. Korhonen and Chairperson of the Board Liisa
Leino were all reappointed to the Board for a further term of office. The Board
of Directors elected members to its committees from among its members. Pirkko
Juntti was elected as chairperson of the Audit Committee and Christer Granskog,
Kalle J. Korhonen and Liisa Leino as Committee members. Jukka Viinanen was
elected as chairman of the Compensation Committee and Maarit Aarni-Sirviö and
Reino Hanhinen as Committee members. The term of office of the Board of
Directors ends at the close of the following Annual General Meeting.
The Annual General Meeting appointed Marjo Matikainen-Kallström MP as the new
chairperson of the Supervisory Board and Inkeri Kerola MP as the new deputy
chairperson. Heikki Allonen Msc (Tech), Turo Bergman, Political Secretary,
Miapetra Kumpula-Natri MP, Petteri Orpo MP, Jouko Skinnari MP, Markku Tynkkynen,
Executive Vice President, Resources, and Tapani Tölli MP were all appointed as
members of the Supervisory Board. The term of office of the Supervisory Board
ends at the close of the following Annual General Meeting.
The Annual General Meeting elected Authorised Public Accountants firm KPMG Oy Ab
as the company's new auditor, with Mauri Palvi APA as the principal auditor.
The Annual General Meeting authorised the Board of Directors to resolve to
acquire a maximum of 12,000,000 of the company's own shares. This authorisation
supersedes the Board of Directors' authorisation, granted by the Annual General
Meeting of 20 March 2007, to acquire a similar number of shares. The
authorisation is valid for 18 months from the decision of the Annual General
Meeting.
The Annual General Meeting decided to establish a shareholders' Nomination
Committee to prepare proposals for the following Annual General Meeting
regarding the composition of the Board of Directors and directors' fees.
Shares and share capital
During the first three months of 2008, Rautaruukki Oyj shares were traded for a
total of EUR 1,853 million (1,896) on the OMX Nordic Exchange Helsinki. The
highest price quoted was EUR 30.98 in March and the lowest was EUR 22.37 in
January. The volume weighted average share price was EUR 27.16. At 31 March
2008, the share closed at EUR 30.57 and the company had a market capitalisation
of EUR 4,286 million (4,887).
The company's registered share capital at 31 March 2008 was EUR 238.4 million
and there were 140,209,778 shares issued.
The Board of Directors is authorised to transfer a maximum of 13,785,381
treasury shares held by the company. The authorisation is valid until the close
of the 2009 Annual General Meeting. Pursuant to the authorisation, on 28 March
2008, the company transferred 11,594 shares held by the company to persons
participating in the Group's Share Ownership Plan. After the transfer,
Rautaruukki holds 1,465,343 treasury shares, which, at 31 March 2008, had a
market value of EUR 45 million and a book value of EUR 6.3 million. Treasury
shares account for a relative percentage of one per cent of the total number of
shares and votes.
The Annual General Meeting authorised the Board of Directors to resolve to
acquire a maximum of 12,000,000 of the company's own shares. The authorisation
supersedes the Board of Directors' authorisation, granted by the Annual General
Meeting of 20 March 2007, to acquire a similar number of shares.
The Board of Directors did not exercise this authorisation during the first
quarter of 2008.
Employee warrants based on the 2003 bond with warrants have been publicly traded
on the OMX Nordic Exchange Helsinki since 24 May 2006. One warrant entitles the
holder to subscribe one share at an issue price of EUR 1.70. Warrants had been
exercised to subscribe a total of 1,323,333 shares by 31 March 2008. The
remaining warrants entitle holders to subscribe a total of 76,667 shares. The
subscription period expires on 23 May 2009.
At the end of the report period, the Board of Directors had no valid
authorisations to issue convertible bonds or bonds with warrants or to increase
the company's share capital.
Environmental and energy issues
In the free allocation for the second period 2008-2012 of the EU Emissions
Trading Scheme, the Raahe Works received emissions allowances corresponding to
91 per cent and the steam boilers at the Hämeenlinna Works allowances
corresponding to 86 per cent of their needs at maximum capacity. This makes a
total of 23.5 million emissions allowances.
During the report period, Rautaruukki made a decision to close down sinter plant
operations at the Raahe Works by the end of 2011. The company will switch over
to using iron pellets only instead of sinter as a raw material in the
iron-making process. Closing the sinter plant will reduce the present level of
carbon dioxide emissions by 10 per cent or 500,000 tonnes. It will also
significantly reduce dust and sulphur dioxide emissions at the works and cut
energy consumption.
Improvement in cost-efficiency
Ruukki United, Rautaruukki's programme to harmonise ways of working and improve
efficiency, aims to achieve annual cost savings, compared with 2004 levels, of
around EUR 150 million by the end of the current year. EUR 103 million of this
target had been achieved by the end of the report period.
The Ruukki United programme also seeks to permanently free up some EUR 150
million of capital by year-end 2008. EUR 84 million of this figure had been
achieved by the end of the report period.
Events taking place after 31 March 2008
The company is to further enhance delivery capacity of special products through
deployment of a new cut-to-length line at the Raahe Works in Finland. The new
line will serve engineering industry customers who use cut-to-length sheets in
lifting, handling and loading equipment. The investment is worth a total of
around EUR 23 million and will come on stream by the end of 2009. (Release 2
April 2008)
The company is to increase the capacity of its steel service centre in St
Petersburg to meet growing demand in Russia. A new cut-to-length line will start
up at the steel service centre in autumn 2008. Cut-to-length and slitting
services will enable the company in particular to serve light engineering
industry customers. (Release 9 April 2008)
Rautaruukki's acquisition of the business operations of Hybri-Steel Oy
strengthens its special product expertise. Based in Uusikaupunki, Finland,
Hybri-Steel's core business is laser-welded sandwich panels and laser and
laser-hybrid welding. (Release 17 April 2008)
Rise in prices of steel raw materials in 2008
Prices of raw materials (iron ore, coal, filler materials and alloying elements)
for 2008 have risen sharply on the global market. It is estimated the higher
cost of raw materials will add more than EUR 200 million to company's own steel
production costs in 2008 compared to 2007. Around one third of the rise in costs
will be realised during the first half of the year and two thirds during the
second half. To offset growing costs, price increases will be implemented and
cost-efficiency improved. The size and timing of price rises will vary according
to product and market area.
Risks
In weak market conditions, Rautaruukki is prepared to scale back sales and steel
production in line with profitable demand. This might cause short-term
fluctuations in the company's profitability.
Exchange rate fluctuations can have significant impact on the company's
performance. The company's largest purchasing currency is the US dollar. In
sales, the Group is exposed to a foreign currency risk mainly in Swedish kronor,
Norwegian kroner, the Russian rouble, Polish zloty and the currencies of the
Baltic states.
Long-term delivery contracts ensure the availability of raw materials. Hedging
contracts are used to manage the price risks of zinc and electricity.
As its spreads, the US credit crisis and other factors of uncertainty in the
global economy might affect demand for the company's products. However, the
company believes the impact of these factors will have less impact to in its
core market areas, the Nordic countries, Central Eastern Europe and especially
in Russia and Ukraine.
Increasingly tighter environmental regulations might cause additional costs and
investments. Since delivery accuracy is an increasingly critical factor,
disruptions in production and the labour market have an increasingly greater
financial impact.
Near-term outlook
Good demand for Rautaruukki's products is expected to continue in key customer
industries.
In construction the first quarter of the year is typically the quietest. Good
demand for non-residential and infrastructure construction is expected to
continue in all market areas.
Order books in the engineering industry are strong in all customer sectors.
Further growth in demand is expected in the lifting, handling and transportation
equipment industry. Demand in the energy industry is expected to continue very
good. The shipbuilding industry has firm order books.
Good demand for steel products is expected to continue in all product groups.
There is strong growth especially in the demand for plate and special steel
products.
Comparable net sales growth is expected to meet the target and exceed 10 per
cent. Operating profit in 2008 is expected to be higher than in 2007.
This report is unaudited.
Helsinki, 23 April 2008
Rautaruukki Corporation
Board of Directors
DIVISIONS
Since the beginning of 2008, the accounting principle for segment information
has been revised so that Ruukki Metals division is responsible for the costs
arising from the unutilised capacity of Rautaruukki's own steel production. The
comparable segment information for 2007 has been adjusted to comply with the new
accounting principle.
Ruukki Construction
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | 2007 | Q1/08 |
--------------------------------------------------------------------------------
| Net sales | 213 | 258 | 278 | 292 | 1 042 | 225 |
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| Operating profit | 34 | 40 | 51 | 38 | 163 | 21 |
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| as % of net sales | 16 | 16 | 18 | 13 | 16 | 9 |
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The figures are comparable pro forma figures.
Net sales up by 6 per cent
January-March is typically the quietest quarter of the year in construction.
Ruukki Construction's net sales were up by 6 per cent and reached EUR 225
million (213). The division accounted for 24 per cent (23) of consolidated net
sales.
A harsher winter than a year earlier in Central Eastern Europe reduced
construction during the first quarter. This explains the decrease in Ruukki
Construction's sales volumes in this market area compared to the figure a year
earlier. Good demand for non-residential construction continued during
January-March in Northern Europe, Russia, Ukraine and Poland.
Delivery volumes of roofing components declined in the Nordic countries and
Baltics as a result of an overall slow down in the residential construction
market. Roofing products account for some 10 per cent of the division's net
sales.
Infrastructure construction demand and deliveries continued good both in road
and railway construction and foundation building. Demand was especially good in
Sweden.
The division's operating profit declined to EUR 21 million (34). Ruukki
Construction's first quarter results weakened due to decreased construction
activity in Central Eastern Europe and decreased demand for roofing products in
Finland, Estonia and Latvia. The division has embarked on an extensive
investment programme to expand capacity and this has led to higher costs from
start-up operations and building the organisation. The investments will be
completed in stages during the course of 2008-2009. These investments will
support the division's target of achieving annual net sales of EUR 1.5 billion
by the end of 2010 (excluding acquisitions).
Compared to a year earlier, the product range was geared more towards project
deliveries, whose relative profitability is, to some extent, lower than that of
component deliveries.
To offset higher raw material costs, sales prices will be increased. Within
Ruukki Construction, sales prices are negotiated on a project- and
country-specific basis.
Major new orders and solutions
Rautaruukki further strengthened its position as a leading solutions supplier in
steel construction in Russia and the Nordic countries. In Russia, the company
signed a major contract worth EUR 100 million to deliver steel structures for
the new Zenit football stadium to be built in St Petersburg. The customer has
specified that deliveries are to start in July-August.
In addition, the company signed contracts in Russia and the Nordic countries for
total deliveries of industrial and logistics buildings for customers such as
Samsung and Rosneft. During the report period, an agreement was also signed for
total delivery of a maintenance and office building to be constructed at
Helsinki-Vantaa Airport using Rautaruukki's new rock foundation system. In
Sweden, the company will supply steel structures for the bridge crossing the
Hudälven river and foundations for the Henriksdalhamn landfill site in
Stockholm.
Ruukki Construction continued to launch new technologies onto the market. In
March, the division presented in Hungary its effective solution to speed up the
construction of single-storey buildings. The solution includes the design,
manufacture and installation of foundation, frame and sandwich panels. Product
development spawned planning, visualisation and offer software that considerably
shortens the initial stage in a project and ensures the choice of compatible
building components. The solutions package will also be launched onto other
markets in Central Eastern Europe during the spring.
Capital expenditure
Construction of a new sandwich panel plant in Finland will strengthen delivery
capability in the Nordic, Baltic and Northwestern Russian non-residential
construction markets. The total investment is worth around EUR 20 million. It
will be completed in autumn 2009 and will particularly increase delivery
capacity to industrial and commercial customers in the Nordic countries and
Baltics.
In addition, Ruukki Construction has an investment programme of around EUR 120
million under way to expand production capacity in Central Eastern Europe,
Finland and Russia. Investments will especially strengthen frame and sandwich
panel delivery capability. In addition, profile production is being increased in
Romania and Ukraine. New frame structure production lines will start up in
Poland and Romania and expansion investments in Russia will begin during the
second and third quarters. The sandwich panel lines in Romania and Ukraine will
enter production during the second half of the year. Profile production at the
plant in Ukraine will get under way this summer. A new sandwich panel line will
be built in Russia in autumn 2009.
Ruukki Engineering
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | 2007 | Q1/08 |
--------------------------------------------------------------------------------
| Net sales | 167 | 163 | 157 | 180 | 667 | 188 |
--------------------------------------------------------------------------------
| Operating profit* | 32 | 27 | 25 | 18 | 103 | 32 |
--------------------------------------------------------------------------------
| as % of turnover | 19 | 17 | 16 | 10 | 15 | 17 |
--------------------------------------------------------------------------------
* The figures are comparable pro forma figures.
Net sales up by 13 per cent
Ruukki Engineering's net sales during January-March 2008 were up by 13 per cent
year-on-year to EUR 188 million (167). Net sales rose on the back of continuing
favourable market conditions and the acquisition made last year in Hungary. The
division accounted for 20 per cent (18) of consolidated net sales.
The division's operating profit for January-March was EUR 32 million, about the
same as a year earlier (32). Price increases in annual contracts and favourable
market conditions, especially in the energy industry, improved the division's
profitability during the first quarter. Twenty-five per cent of customers are on
an annual contract basis. It is uncertain whether or not higher raw materials
costs can be passed on to sales prices in respect of these contracts during the
course of 2008. Raw material problems in Norway have been solved and deliveries
to wind turbine customers are now running to plan.
Growth strategy progressing to plan
Acquisition of German company Wolter Metallverarbeitung GmbH in February
complements the division's growth strategy in the lifting, handling and
transportation equipment industry, which accounted for 45 per cent of the
division's net sales. Wolter's main products are telescopic booms for leading
globally operating European crane customers. The acquisition gave the division a
new product range and broader customer base.
Integration into Rautaruukki of units acquired in Germany and Hungary is
progressing to plan and will be completed during 2008.
During the report period, Ruukki Engineering launched a division-wide
profitability improvement programme aimed at improving the division's operating
profit by around EUR 20 million in 2008. In the same context, the division
adopted a new organisation and management model to support growth and
profitability. Productivity will be improved by boosting production and
increasing capacity to meet growing demand and the division's broader customer
base.
Ruukki Metals
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | 2007 | Q1/08 |
--------------------------------------------------------------------------------
| Net sales | 547 | 567 | 478 | 501 | 2 093 | 525 |
--------------------------------------------------------------------------------
| Operating profit* | 119 | 116 | 96 | 69 | 400 | 97 |
--------------------------------------------------------------------------------
| as % of net sales | 22 | 21 | 20 | 14 | 19 | 19 |
--------------------------------------------------------------------------------
* The figures are comparable pro forma figures.
Special products accounted for greater share of sales
Ruukki Metals' net sales during January-March 2008 were EUR 525 million (547).
The division accounted for 56 per cent (59) of consolidated net sales. Special
products continued to form an increasing share of sales to account for 28 per
cent (23) during the first quarter of 2008.
End-customer demand was good in almost all the division's main market areas and
customer industries. Demand for special products was extremely good in Western
Europe. Excellent demand for plates, hot strip and hollow sections meant longer
than normal delivery times. However, demand in the Baltics was quieter than
anticipated. Sales of colour-coated products decreased due to seasonal
fluctuation. Destocking by wholesalers and a decrease in imports from outside
Europe have strengthened demand for steel products.
The division's operating profit for January-March was down 18 per cent to EUR 97
million (119) compared to exceptionally strong performance during the same
quarter a year earlier. Trading margins on stainless steel were EUR 11 million
lower than during the comparable period. Unutilised capacity during the report
period was around EUR 4 million higher than during the comparable period a year
earlier. Sales volumes and prices of galvanised products were somewhat lower
year-on-year. Stocks of galvanised products had normalised compared to the
previous quarter and there was a clear improvement in demand.
To offset higher costs of raw materials in steel production, sales price
increases will be implemented during the second and third quarters. It is
estimated these increases will compensate for the higher costs of raw materials.
The division made good progress with work started in 2007 to improve the
business model and service network and small batch deliveries are being focused
on the Hyvinkää service centre in Finland. Flame cutting operations have got off
to a good start at the panel and steel structure plant in Oborniki, Poland. This
will improve the delivery capability of special products and parts, especially
to customers in the heavy engineering industry.
New finishing capacity for special steel products will come on stream in stages
during 2008. In the second quarter of the year, a plasma cutting and packing
unit for high-strength plate products in particular, as well as the
commissioning of the first stage of a new steel ladle treatment unit, will
increase the production capacity of high-strength and wear-resistant steels and
components. These investments are worth around EUR 23 million in total.
Ruukki Production
--------------------------------------------------------------------------------
| 1000 tonnes | Q1/07 | Q2/07 | Q3/07 | Q4/07 | 2007 | Q1/08 |
--------------------------------------------------------------------------------
| Steel production | 703 | 672 | 610 | 561 | 2 546 | 672 |
--------------------------------------------------------------------------------
Rautaruukki's steel production during January-March was 672 000 tonnes (703
000). Technically, production ran well and capacity utilisation was normal.
Prices of raw materials (iron ore, coal, filler materials and alloying elements)
for 2008 have risen sharply on the global market. It is estimated that the
higher cost of raw materials will add more than EUR 200 million to company's own
steel production costs in 2008 compared to 2007. Around one third of the rise in
costs will be realised during the first half and two thirds during the second
half of the year.
A strike at the Raahe Works by employees belonging to a trade union branch
stopped hot-rolling for about 48 hours and steel production ran at half
capacity. The strike had a negative impact of around EUR 3 million on the
company's operating profit for the first quarter.
A decision was taken in March to close the sinter plant at the Raahe Works by
the end of 2011. Rautaruukki will switch over entirely to using iron pellets,
for which it has a long-term supply contract with Swedish company LKAB. The
decision to close the sinter plant will add EUR 1.9 million per year to the
company's depreciation between 2008 and 2011.
The accident frequency rate was 12 per million working hours, a marked decrease
compared to figure (21) for the comparable period a year earlier.
TABLES
This interim report has been prepared in accordance with IAS 34 and is in
conformity with the accounting policies published in the annual financial
statements.
Individual figures and totals appearing in the tables have been rounded to the
nearest full million of euros. This means that they will not always tally when
added together or subtracted. The figures given in tables are unaudited.
--------------------------------------------------------------------------------
| SUMMARY CONSOLIDATED INCOME STATEMENT |
--------------------------------------------------------------------------------
| EUR million | Q1/08 | Q1/07 | 2007 |
--------------------------------------------------------------------------------
| Net sales | 939 | 950 | 3 876 |
--------------------------------------------------------------------------------
| Other operating income | 5 | 4 | 26 |
--------------------------------------------------------------------------------
| Operating expenses | -764 | -739 | -3 111 |
--------------------------------------------------------------------------------
| Depreciation, amortisation and | -37 | -38 | -153 |
| impairment losses | | | |
--------------------------------------------------------------------------------
| Operating profit | 143 | 178 | 637 |
--------------------------------------------------------------------------------
| Finance income and expense | -4 | -2 | -20 |
--------------------------------------------------------------------------------
| Share of results of associated | 1 | 1 | 3 |
| companies | | | |
--------------------------------------------------------------------------------
| Profit before taxes | 140 | 177 | 621 |
--------------------------------------------------------------------------------
| Taxes | -34 | -45 | -162 |
--------------------------------------------------------------------------------
| Profit for the period | 106 | 131 | 459 |
--------------------------------------------------------------------------------
| Attributable to: | | | |
--------------------------------------------------------------------------------
| Equity shareholders of the parent | 106 | 131 | 458 |
--------------------------------------------------------------------------------
| Minority interests | 0 | 0 | 1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Diluted earnings per share, EUR | 0.77 | 0.95 | 3.31 |
--------------------------------------------------------------------------------
| Basic earnings per share, EUR | 0.77 | 0.95 | 3.31 |
--------------------------------------------------------------------------------
| Operating profit as % of net sales | 15.2 | 18.7 | 16.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SUMMARY CONSOLIDATED BALANCE SHEET | 31 Mar | 31 Mar | 31 Dec |
--------------------------------------------------------------------------------
| EUR million | 2008 | 2007 | 2007 |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| Non-current assets | 1 493 | 1 449 | 1 473 |
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 615 | 644 | 614 |
--------------------------------------------------------------------------------
| Trade and other receivables | 633 | 622 | 579 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 293 | 399 | 196 |
--------------------------------------------------------------------------------
| | 3 034 | 3 114 | 2 861 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
| Equity | | | |
--------------------------------------------------------------------------------
| Equity attributable to | 2 078 | 1 663 | 1 984 |
| shareholders of the parent | | | |
--------------------------------------------------------------------------------
| Minority interests | 3 | 1 | 3 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 136 | 212 | 138 |
--------------------------------------------------------------------------------
| Other | 190 | 209 | 191 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 83 | 163 | 86 |
--------------------------------------------------------------------------------
| Trade payables and other | 544 | 865 | 461 |
| liabilities | | | |
--------------------------------------------------------------------------------
| | 3 034 | 3 114 | 2 861 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SUMMARY CASH FLOW STATEMENT | | | |
--------------------------------------------------------------------------------
| EUR million | Q1/08 | Q1/07 | 2007 |
--------------------------------------------------------------------------------
| Profit for the period | 106 | 131 | 458 |
--------------------------------------------------------------------------------
| Adjustments | 82 | 81 | 324 |
--------------------------------------------------------------------------------
| Cash flow before change in working | 189 | 212 | 782 |
| capital | | | |
--------------------------------------------------------------------------------
| Change in working capital | 7 | -100 | -128 |
--------------------------------------------------------------------------------
| Financing items and taxes | -44 | -41 | -219 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | 152 | 71 | 435 |
--------------------------------------------------------------------------------
| Cash flow from investing activities | -49 | -26 | -165 |
--------------------------------------------------------------------------------
| Cash flow before financing activities | 103 | 45 | 270 |
--------------------------------------------------------------------------------
| Dividends paid | 0 | 0 | -276 |
--------------------------------------------------------------------------------
| Change in debt | -5 | -7 | -160 |
--------------------------------------------------------------------------------
| Other net cash flow from financing | -1 | 0 | 0 |
| activities | | | |
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | 98 | 38 | -166 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| KEY FIGURES | Q1/08 | Q1/07 | 2007 |
--------------------------------------------------------------------------------
| Net sales, EUR m | 939 | 950 | 3 876 |
--------------------------------------------------------------------------------
| Operating profit, EUR m | 143 | 178 | 637 |
--------------------------------------------------------------------------------
| as % of net sales | 15.2 | 18.7 | 16.4 |
--------------------------------------------------------------------------------
| Profit before taxes, EUR m | 140 | 177 | 621 |
--------------------------------------------------------------------------------
| as % of net sales | 14.9 | 18.6 | 16.0 |
--------------------------------------------------------------------------------
| Profit for the period, EUR m | 106 | 131 | 459 |
--------------------------------------------------------------------------------
| as % of net sales | 11.3 | 13.8 | 11.8 |
--------------------------------------------------------------------------------
| Return on capital employed*, | 28.5 | 37.8 | 29.6 |
| % | | | |
--------------------------------------------------------------------------------
| Return on equity*, % | 23.2 | 36.2 | 24.0 |
--------------------------------------------------------------------------------
| Equity ratio, % | 69.6 | 54.5 | 70.4 |
--------------------------------------------------------------------------------
| Gearing ratio, % | -3.6 | -1.4 | 1.4 |
--------------------------------------------------------------------------------
| Net interest-bearing | -75 | -23 | 28 |
| liabilities, EUR m | | | |
--------------------------------------------------------------------------------
| Equity per share, EUR | 15.0 | 12.0 | 14.3 |
--------------------------------------------------------------------------------
| Personnel on average | 14 622 | 13 258 | 14 715 |
--------------------------------------------------------------------------------
| Number of shares | 140 209 778 | 140 073 340 | 140 198 128 |
--------------------------------------------------------------------------------
| - excluding treasury shares | 138 744 435 | 138 371 959 | 138 721 191 |
--------------------------------------------------------------------------------
| - diluted, average | 138 796 771 | 138 426 183 | 138 566 355 |
--------------------------------------------------------------------------------
| * Based on previous 12 months |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGES IN EQUITY Q1/2008 |
--------------------------------------------------------------------------------
| EUR million |
--------------------------------------------------------------------------------
| | Attributable to equity shareholders of the parent |
--------------------------------------------------------------------------------
| | Share | Share | Fair | Trans- | Ret-ain | Total | Min-or |
| | cap-i | prem. | value | lation | ed | | ity |
| | tal | act. | and | diff. | earn-in | | int. |
| | | | other | | gs | | |
| | | | re-ser | | | | |
| | | | ves | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 1 | 238 | 220 | 9 | -6 | 1 521 | 1 984 | 3 |
| JAN | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
| hedging | | | | | | | |
--------------------------------------------------------------------------------
| Booked to | | | -12 | | | -12 | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | | | 3 | | | 3 | |
--------------------------------------------------------------------------------
| Change in | | | | -3 | | -3 | |
| translation | | | | | | | |
| difference | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 106 | 106 | 0 |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Cost of | | | | | | | |
| share-based | | | | | | | |
| payments | | | | | | | |
--------------------------------------------------------------------------------
| Disposal of | | | | | | | |
| treasury | | | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | | | |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 31 | 238 | 220 | 0 | -9 | 1 629 | 2 078 | 3 |
| MAR | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGE IN EQUITY Q1/2007 |
--------------------------------------------------------------------------------
| EUR million |
--------------------------------------------------------------------------------
| | Attributable to equity shareholders of the parent |
--------------------------------------------------------------------------------
| | Share | Share | Fair | Trans- | Ret-ain | Total | Min-or |
| | cap-i | prem. | value | lation | ed | | ity |
| | tal | act. | and | diff. | earn-in | | int. |
| | | | other | | gs | | |
| | | | re-ser | | | | |
| | | | ves | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 1 | 238 | 220 | 44 | -3 | 1 333 | 1 832 | 1 |
| JAN | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
| hedging | | | | | | | |
--------------------------------------------------------------------------------
| Booked to | | | -29 | | | -29 | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | | | 8 | | | 8 | |
--------------------------------------------------------------------------------
| Change in | | | | -4 | | -4 | |
| translation | | | | | | | |
| difference | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 131 | 131 | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Cost of | | | | | | | |
| share-based | | | | | | | |
| payments | | | | | | | |
--------------------------------------------------------------------------------
| Disposal of | | | -2 | | 2 | 0 | |
| treasury | | | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | -276 | -276 | |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 31 | 238 | 220 | 21 | -7 | 1 191 | 1 663 | 1 |
| MAR | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES BY DIVISION |
--------------------------------------------------------------------------------
| EUR million | Q1/08 | Q1/07 | 2007 | Q1/07 | 2007 |
| | | | | pro forma | pro forma |
--------------------------------------------------------------------------------
| Ruukki Construction | 225 | 213 | 1 042 | 213 | 1 042 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 188 | 167 | 667 | 167 | 667 |
--------------------------------------------------------------------------------
| Ruukki Metals | 525 | 570 | 2 168 | 547 | 2 093 |
--------------------------------------------------------------------------------
| Group management and | 1 | 0 | 0 | 0 | 0 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated net | 939 | 950 | 3 876 | 927 | 3 802 |
| sales | | | | | |
--------------------------------------------------------------------------------
| Pro forma = excluding Ruukki Betonstahl GmbH and Ruukki Welbond BV |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT BY DIVISION |
--------------------------------------------------------------------------------
| EUR million | Q1/08 | Q1/07 | 2007 | Q1/07 | 2007 |
| | | | | pro forma | pro forma |
--------------------------------------------------------------------------------
| Ruukki Construction | 21 | 34 | 163 | 34 | 163 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 32 | 32 | 103 | 32 | 103 |
--------------------------------------------------------------------------------
| Ruukki Metals | 97 | 117 | 397 | 119 | 400 |
--------------------------------------------------------------------------------
| Group management and | -7 | -6 | -25 | -6 | -25 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated | 143 | 178 | 637 | 179 | 641 |
| operating profit | | | | | |
--------------------------------------------------------------------------------
| Pro forma = excluding Ruukki Betonstahl GmbH and Ruukki Welbond BV |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NET SALES |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | Q1/08 |
--------------------------------------------------------------------------------
| Ruukki Construction | 213 | 258 | 278 | 292 | 225 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 167 | 163 | 157 | 180 | 188 |
--------------------------------------------------------------------------------
| Ruukki Metals | 570 | 588 | 500 | 509 | 525 |
--------------------------------------------------------------------------------
| Group management and | 0 | 0 | 0 | 0 | 1 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated net sales | 950 | 1 009 | 935 | 982 | 939 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | Q1/08 |
--------------------------------------------------------------------------------
| Ruukki Construction | 34 | 40 | 51 | 38 | 21 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 32 | 27 | 25 | 18 | 32 |
--------------------------------------------------------------------------------
| Ruukki Metals | 117 | 115 | 96 | 68 | 97 |
--------------------------------------------------------------------------------
| Group management and | -6 | -5 | -10 | -5 | -7 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated operating | 178 | 178 | 162 | 120 | 143 |
| profit | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NET SALES (PRO FORMA) |
| EXCLUDING RUUKKI BETONSTAHL GMBH AND RUUKKI WELBOND BV |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | Q1/08 |
--------------------------------------------------------------------------------
| Ruukki Construction | 213 | 258 | 278 | 292 | 225 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 167 | 163 | 157 | 180 | 188 |
--------------------------------------------------------------------------------
| Ruukki Metals | 547 | 567 | 478 | 501 | 525 |
--------------------------------------------------------------------------------
| Group management and | 0 | 0 | 0 | 0 | 1 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated net sales | 927 | 988 | 914 | 973 | 939 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT (PRO FORMA) |
| EXCLUDING RUUKKI BETONSTAHL GMBH AND RUUKKI WELBOND BV |
--------------------------------------------------------------------------------
| EUR million | Q1/07 | Q2/07 | Q3/07 | Q4/07 | Q1/08 |
--------------------------------------------------------------------------------
| Ruukki Construction | 34 | 40 | 51 | 38 | 21 |
--------------------------------------------------------------------------------
| Ruukki Engineering | 32 | 27 | 25 | 18 | 32 |
--------------------------------------------------------------------------------
| Ruukki Metals | 119 | 116 | 96 | 69 | 97 |
--------------------------------------------------------------------------------
| Group management and | -6 | -5 | -10 | -5 | -7 |
| other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated operating | 179 | 179 | 162 | 120 | 143 |
| profit | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES BY REGION |
--------------------------------------------------------------------------------
| as % of net sales | Q1/08 | Q1/07 | 2007 |
--------------------------------------------------------------------------------
| Finland | 33 | 31 | 31 |
--------------------------------------------------------------------------------
| Other Nordic countries | 32 | 34 | 30 |
--------------------------------------------------------------------------------
| Central Eastern Europe, | 18 | 18 | 21 |
| Russia and Ukraine | | | |
--------------------------------------------------------------------------------
| Rest of Europe | 15 | 16 | 15 |
--------------------------------------------------------------------------------
| Other countries | 3 | 2 | 3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONTINGENT LIABILITIES |
--------------------------------------------------------------------------------
| EUR million | Mar 08 | Mar 07 | Dec 07 |
--------------------------------------------------------------------------------
| Mortgaged real estates | 24 | 26 | 24 |
--------------------------------------------------------------------------------
| Pledges given | 5 | 3 | 5 |
--------------------------------------------------------------------------------
| Other guarantees given | 45 | 32 | 41 |
--------------------------------------------------------------------------------
| Collateral | | | |
--------------------------------------------------------------------------------
| Given on behalf of | 0 | 0 | 0 |
| associates | | | |
--------------------------------------------------------------------------------
| Given on behalf of others | 6 | 5 | 6 |
--------------------------------------------------------------------------------
| Leasing and rental responsibilities | 154 | 107 | 154 |
--------------------------------------------------------------------------------
| Other financial liabilities | 0 | 7 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| VALUES OF DERIVATIVE CONTRACTS AT 31 MARCH 2008, EUR million |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOW HEDGES QUALIFYING FOR HEDGE ACCOUNTING |
--------------------------------------------------------------------------------
| | Nominal value | Fair value |
--------------------------------------------------------------------------------
| Zinc derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts * | 45 000 | -6 |
--------------------------------------------------------------------------------
| Electricity derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts ** | 1 232 | 6 |
--------------------------------------------------------------------------------
| * tonnes |
--------------------------------------------------------------------------------
| ** Gwh |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| DERIVATIVES NOT QUALIFYING FOR HEDGE ACCOUNTING |
--------------------------------------------------------------------------------
| | Nominal value | Fair value |
--------------------------------------------------------------------------------
| Foreign currency derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts | 534 | -9 |
--------------------------------------------------------------------------------
| Options | | |
--------------------------------------------------------------------------------
| Bought | 180 | -2 |
--------------------------------------------------------------------------------
| Sold | 180 | -11 |
--------------------------------------------------------------------------------
The unrealised result of cash flow hedges is recognised in equity to the extent
the hedge is effective. Other changes in fair value are recorded through profit
and loss.
--------------------------------------------------------------------------------
| CHANGES IN PLANT, PROPERTY AND EQUIPMENT |
--------------------------------------------------------------------------------
| EUR million | Q1/08 | Q1/07 | 2007 |
--------------------------------------------------------------------------------
| Carrying value at start of period | 1 076 | 1 043 | 1 043 |
--------------------------------------------------------------------------------
| Increase | 45 | 23 | 157 |
--------------------------------------------------------------------------------
| Increase through acquisitions | 0 | 1 | 18 |
--------------------------------------------------------------------------------
| Decrease | -1 | -1 | -11 |
--------------------------------------------------------------------------------
| Depreciation and value adjustments | -30 | -30 | -129 |
--------------------------------------------------------------------------------
| Exchange rate differences | -2 | -1 | -1 |
--------------------------------------------------------------------------------
| Carrying value at end of period | 1 088 | 1 035 | 1 076 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TRANSACTIONS WITH RELATED PARTIES |
--------------------------------------------------------------------------------
| EUR million | Q1/08 | Q1/07 | 2007 |
--------------------------------------------------------------------------------
| Sales to associated companies | 6 | 6 | 23 |
--------------------------------------------------------------------------------
| Purchases from associated companies | 0 | 2 | 7 |
--------------------------------------------------------------------------------
| Trade and other receivables at 31 March | 5 | 9 | 6 |
--------------------------------------------------------------------------------
| Trade and other creditors at 31 March | 1 | 1 | 0 |
--------------------------------------------------------------------------------
| Transactions with Pension Foundation | 1 | 1 | 6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INVESTMENT COMMITMENTS* | |
--------------------------------------------------------------------------------
| EUR million | after 31 March 2008 |
--------------------------------------------------------------------------------
| Maintenance investments | 137 |
--------------------------------------------------------------------------------
| Development investments and investments in special | 187 |
| products | |
--------------------------------------------------------------------------------
| Total | 324 |
--------------------------------------------------------------------------------
| *Investment commitments include the estimated costs of projects that have |
| received permission to go ahead. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INFORMATION ABOUT ACQUISITIONS | | |
--------------------------------------------------------------------------------
| EUR million | Fair value | Acquired company's |
| | | carrying amount |
--------------------------------------------------------------------------------
| Assets and liabilities of acquired | | |
| companies (carrying amount) | | |
--------------------------------------------------------------------------------
| Non-current assets | 4 | 0 |
--------------------------------------------------------------------------------
| Current assets | | |
--------------------------------------------------------------------------------
| Inventories | 0 | 0 |
--------------------------------------------------------------------------------
| Trade and other receivables | 1 | 1 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 0 | 0 |
--------------------------------------------------------------------------------
| Total assets | 5 | 1 |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing | 0 | 0 |
--------------------------------------------------------------------------------
| Other | 1 | 0 |
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing | 0 | 0 |
--------------------------------------------------------------------------------
| Other | 1 | 1 |
--------------------------------------------------------------------------------
| Total liabilities | 2 | 1 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | 3 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost | 4 | |
--------------------------------------------------------------------------------
| - including conditional purchase | 2 | |
| price | | |
--------------------------------------------------------------------------------
| Goodwill | 2 | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost paid in cash | 2 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents of the | 0 | |
| acquired subsidiary | | |
--------------------------------------------------------------------------------
| Impact on cash flow | 2 | |
--------------------------------------------------------------------------------
| Includes information about the acquisition of Wolter Metallverarbeitung |
| GmbH. The acquisition has been recognised on a preliminary basis in the |
| manner permitted by IFRS 3. Determination of the fair value of the company's |
| assets and liabilities was still incomplete at the time the interim report |
| was published. |
--------------------------------------------------------------------------------