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RHI Confirms Results 2013
Duribg the financial year 2013, the Group pushed ahead several issues and had to cope with setbacks. The acquisition of a 69,6 % share in the Indian company Orient Refractories Ltd. and the termination of the US Chapter 11 Proceedings had a particularly positive impact. In contrast, the site in Duisburg/DE was closed which had become necessary due to the declining steel production in Europe; in addition, unexpected difficulties in the fusion plant in Norway occured, which placed a massive burden on the results of the year 2013. In the current financial year the focus is on eliminating these difficulties. The acquisition in India fits in perfectly with the strategy of the RHI Group which intends to double the company’s revenues in the medium term by participating in the growth of the Indian refractories market and by tapping sales synergies within the Group. After eleven years, the US Chapter 11 Proceedings were terminated definitively and with legal security. With the completion of the reorganization proceedings of the US companies, which had been deconsolidated as of 31 December 2001, all present and future asbestos-related claims were transferred to the trust funds. In addition to the important legal security, the RHI Group now is completely free in developing the US refractories market again and can pursue all strategic options to strengthen its market position. RHI also received a payment of USD 40 million from the former owner of one of the US companies. While steel output in the European Union totaled some 210 Mt in the year 2007, it amounted to only 166 Mt in the past financial year, thus falling more than 20 % short of the pre-crisis level. As RHI does not assume that the volume produced within the European Union will reach the level of 2007 again in the future and expects lower growth rates in the European steel industry in the coming years, it was necessary to adjust the refractory production capacities of the RHI Group. Therefore, the Supervisory Board of RHI AG approved the closure of the plant in Duisburg which primarily produced magnesia-carbon bricks for the steel industry. The weak economy and the associated difficult market environment caused a decline in sales volume of RHI’s Steel and Industrial Divisions and led to weak capacity utilization at the production facilities. Utilization totaled only approximately 76 % and consequently fixed costs were not covered. With sales volume amounting to roughly 1739 Mt in the year 2013, the decline in comparison with the pre-crisis level of 2007 was slightly more than 13 %. In the implementation of the backward integration strategy, setbacks were recorded in the past financial year. After a series of technical defects including fire damage and the clogging of a connecting pipe had delayed the start-up phase of the fusion plant in Porsgrunn/NO, it became evident in the 4th quarter of 2013 that the costs budgeted in the original business plan would not be attainable in the medium term. The production capacity for fused magnesia installed in Norway is an important element in the RHI Group’s raw material supply security. In addition to independence of Chinese suppliers, the high quality provides for a unique selling proposition among the customers of the steel segment. In the year 2013, RHI generated 57 % of its revenues in the emerging markets; in the year 2020, this share may already amount to roughly 70 %. RHI strives to participate in the further catching-up process of the emerging markets and to grow together with its customers in these markets. While the number of motor vehicles per 1000 inhabitants in China and India ranks in the low double-digit range, more than 800 vehicles per 1000 inhabitants are registered in the USA, according to data of the World Bank. Per capita steel consumption in India is in the medium double-digit kilogram range, while figures significantly exceeding 300 kilograms per capita are realized in Europe, the USA or even China. This results in enormous growth potential, which RHI intends to increasingly benefit from in the years to come.