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RHI: Record Revenues and Improved Profitability in Second Quarter 2011

In comparison with the reference quarter of 2010, the RHI Group’s revenues increased by 9,7 % to EUR 437,1 million in the second quarter of 2011. The Steel Division recorded a 13,2 % growth in revenues; in the Industrial Division growth amounted to 3,1 %. Second quarter 2011 sales volumes amounted to 503194 t compared with 551711 t in the second quarter of 2008. The significant revenue per metric ton increase is primarily attributable to the increase in prices, which were necessary due to the rise in raw material costs in 2010. The operating result of the second quarter, at EUR 40 million, remains at the level of the comparable period of 2010 of EUR 40,8 million, with the second quarter of 2010 containing a positive one-off effect of EUR 7,9 million. The operating result margin, at 9,2 %, thus still lagged behind that of the comparable quarter of 2010 at 10,2 %. In comparison with the first quarter of 2011, the RHI Group increased revenues by 5,6 % and the operating result by roughly 37 % in the second quarter of 2011. At the balance sheet date on 1 July 2011 the equity ratio amounted to 22,5 %, remaining unchanged compared to the first quarter as dividend payment almost completely offset the gain in retained earnings for the quarter. Cash and cash equivalents were also nearly unchanged in comparison with the end of the first quarter of 2011 and equaled EUR 86,6 million. Net cash flow from operating activities increased only marginally in the second quarter of 2011 to cumulated EUR 29,1 million (Q1/2011: EUR 26,8 million). In the second quarter of 2011, RHI’s Steel Division increased revenues by 6,6 % compared to the first quarter, thus clearly outperforming world steel production with an increase of 2 % in the reference period. The operating result improved from EUR 6,1 million to EUR 20,6 million, with the result of the previous quarter being strongly influenced by negative foreign currency effects. The operating result margin amounted to 7,4 %, significantly above the margins of the previous quarters. The Industrial Division raised revenues to EUR 149,3 million, up 3,3 % on the first quarter of 2011. Compared to the second quarter of the previous year, the increase was 3,1 %. The operating result in the second quarter equaled EUR 18,2 million; the operating result margin amounted to 12,2 %, versus 10,9 % in the previous quarter. On 16 June the acquisition of the Russian refractories manufacturer ZAO Podolsk Refractories was finalized. Starting in 2012, the product quality on site will be gradually improved as part of an investment and technology transfer program. The Raw Materials Division reported revenues of EUR 54,8 million in the second quarter of 2011, versus EUR 40,6 million in the prior-year period. The operating result amounted to EUR 1,2 million in the reporting period, which corresponds to a margin of 2,2 %. In a stable macro-economic environment with unchanged foreign currency exchange rates, RHI expects revenues comparable to the first half in the second half of the year 2011 and assumes that in the third quarter the EBIT margin will be comparable to the second quarter 2011. In the fourth quarter of 2011 the EBIT margin for the Group will rise to 9,5 % (8/2011).

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