RHI: Problems in Norway Strain Earnings Situation
While the revenues of the Steel Division declined by 3,6 % because business in Europe was weaker than expected, the Industrial Division’s revenues fell by 4,7 % especially due to the postponement of projects in the business unit glass. The operating result in the past quarter amounted to EUR 32,2 million and is burdened by technical problems in the newly constructed fusion plant in Norway totaling roughly EUR 12 million, and by negative currency effects. Compared with the operating result of the second quarter of 2013, which was adversely affected by negative one-off effects of EUR 11 million, this corresponds to an increase by 18,4 %. The operating result margin rose from 6,1 to 7,5 %. Revenues in the first nine months of the year 2013 fell by 5,4 % compared with the same period of 2012 and amounted to EUR 1298,1 million. Although sales volume in the Steel Division dropped by 6,3 % in a weak economic environment, the decline in revenues was more moderate at 3,4 % due to the consistent implementation of a sales strategy focusing on profitability and an improved product mix. Revenues in the Industrial Division decreased by 8 % because of weaker project business in the segment environment, energy, chemicals, and due to project postponements in the business unit glass. The decline in the operating result by 17,9 % to EUR 108,8 million is attributable to the technical problems which occurred during the start-up phase of the newly established fusion plant in Norway, lower capacity utilization at the production sites and negative exchange rate effects. Provided that the macroeconomic environment remains stable and with no changes in exchange rates, RHI expects the fourth quarter of 2013 to be the strongest quarter of the Industrial Division in terms of revenues due to delays of deliveries in the third quarter, and revenues to increase slightly in the Steel Division in comparison with the third quarter of 2013. The operating result is expected to be negatively affected by roughly EUR 10 million in the fourth quarter due to the technical problems in Norway, which are still unresolved. As soon as the results of the analyses currently carried out are available, RHI will report on them. For the full year 2013, RHI expects revenues to be slightly below the level of the previous year. The operating result margin is expected to fall significantly short of that of the year 2012 due to insufficient coverage of fixed costs resulting from low capacity utilization, negative currency effects and the abovementioned burden on the result in Norway.