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RHI Group: Results of the First Half of 2016

In the Steel Division, revenue decreased by 5,6 % especially due to a weaker business development in South America, Europe and China. In the Industrial Division, the decline in revenue by 14,4 % compared with the first half of 2015 is among other things attributable to lower deliveries in the cement/lime, glass and environment, energy, chemicals business units. The operating EBIT amounted to EUR 70,2 million in the first half of the year. Compared with the first half of 2015, at EUR 68,6 million, this is an increase by 2,3 % despite the decrease in revenue. This development is primarily due to a highly satisfactory earnings situation in the Steel Division based on positive product mix effects, better utilization of the production capacities resulting from the increase in sales volume as well as savings in overhead costs. Moreover, the operating EBIT of the Raw Materials Division improved significantly as a result of good .capacity utilization at the two Austrian raw material plants, Breitenau and Hochfilzen, which predominantly produce basic mixes for the steel industry, especially for the use in electric arc furnaces, and lower production costs at the plant in Porsgrunn/ NO. In contrast, the operating EBIT of the Industrial Division was lower than in the previous year due to a decline in revenue. The RHI Group’s operating EBIT margin rose from 7,6 % in the first half of 2015 to 8,5 % in the first half of 2016. EBIT amounted to EUR 68,8 million in the first half of this year and includes a negative earnings effect of EUR 4,6 million from the deconsolidation of the US-subsidiary RHI Monofrax, LLC resulting from the sale to the German private equity fund Callista. On the other hand, it also includes a positive net effect from the power supply contract in Norway. Based on own use, the sale at market prices and an increase in electricity future prices, financial liabilities of roughly EUR 3,0 million were reversed and recognized through profit or loss. Despite the challenging market environment, the Management Board is increasing the outlook due to the positive earnings development in the first half of the year. Consequently, an operating EBIT margin of roughly 8 % is expected for the full year 2016, which corresponds to an increase by roughly one percentage point compared with the previous year. Due to the development in the customer industries, RHI is currently working on further optimizing the plant structure, which could lead to an adjustment of production capacities in Europe in the current financial year. In addition, different cost measures have been defined in the sales and general administrative departments.


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