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RHI AG – Growth in Brazil, Russia and China

Revenues of the RHI Group rose by 24,6 % to EUR 1122,0 million in the first nine months of 2010 (2009: EUR 900,2 million). The group’s operating result was increased by 135,6 % to EUR 107,2 million (2009: EUR 45,5 million). It was above all the Steel Division, where revenues were up 42,0 % on the third quarter of 2009. Revenues of the Industrial Division rose by 7,1 %. The group’s operating result soared by 124,7 % to EUR 32,8 million compared to the reference period of 2009. The operating result margin improved from 4,9 % to 8,6 %. Despite expenses for impairment losses and restructuring of EUR -6,4 million, which were largely attributable to plant closures in Chile and Canada, EBIT rose to EUR 26,4 million, versus EUR 11,4 million in the third quarter of 2009. In late October, RHI purchased 980 000 m2 of land in the federal state of Rio de Janeiro, thus laying the foundation for the construction of a production site for refractory products. Depending on the final layout and the production range of the planned plant, the investment is expected to amount to a minimum of EUR 30 million. In the first phase, up to 100 000 t of refractory bricks and mixes will be produced. Construction is scheduled to start in the first four months of 2011; the start of production is planned for late 2012. In Russia, the share held in the refractories producer ZAO Podolsk Refractories was increased to 23,5 %. Moreover, the third tunnel kiln in Dalian was commissioned in late September, increasing production capacity in China by 20 % to 270 000 t/a. Following five consecutive quarters of growth since the crisis, the global steel output declined for the first time in the third quarter of 2010. Yet, the Steel Division realised a significant increase in revenues and earnings in the first three quarters compared to the prior-year reference period. Revenues, at EUR 720,4 million, exceeded the prior-year value by 44,8 %. The operating result of the Steel Division was raised from EUR -5,8 million to EUR 46,3 million. In the Steel Division, RHI expects the business development in the fourth quarter of 2010 to be slightly below that of the previous quarter. The growth of steel production will continue to decline slightly in comparison with the first half of 2010. In the Industrial Division, the third quarter of 2010 was characterised by the seasonal weakness during the summer months and unchanged difficult conditions of the construction and glass industries. In general, following the crisis the investment cycle has not yet resumed in the third quarter either. Therefore, the division’s revenues of the first three quarters, at EUR 382,.4 million, were below the prior-year figure of EUR 387,7 million. In the third quarter of 2010, revenues, at EUR 120,3 million, exceeded the level of the third quarter of 2009 of EUR 112,3 million; however, a decline was recorded compared to the second quarter of 2010 (EUR 144,8 million). The operating result amounted to EUR 13,0 million in the third quarter. The restructuring expenses of EUR 9,3 million were incurred in the context of plant closures in Chile and Canada. In the Industrial Division, the level of incoming orders and the beginning winter repair business give reason to expect a good fourth quarter. The development of the Raw Materials Division will continue to be characterised by price increases and high capacity utilisation in the fourth quarter of 2010. The Raw Materials Division realised revenues totalling EUR 120,9 million in the first nine months of 2010, versus EUR 95,9 million in the prior-year period. In the third quarter of 2010, revenues were up 33,3 % on the reference period of 2009, from EUR 32,4 million to EUR 43,2 million. This was caused by a significantly higher demand by the Steel Division and a 47,7 % increase in external revenues. The operating result amounted to EUR 4,4 million in the reporting period, which corresponds to an increase by 100 % and is attributable to the higher market prices of magnesitic raw materials. Overall, RHI expects a slight increase in revenues in the fourth quarter of 2010 compared to the third quarter of 2010. The result of the fourth quarter will be at the level of the third quarter due to positive mixed effects from the growth in the Industrial business and price effects from raw material price increases, which have not yet been fully passed on. In the whole year 2010, RHI will generate revenues of roughly EUR 1,5 billion, thus exceeding the prior-year figure by a clear margin. (11/2010)

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