Rautaruukki Corporation Interim Report Q1-Q3/2013:

Rautaruukki Corporation Stock exchange release July-September 2013 (Q3/2012) - Net cash from operating activities was EUR 28 million (44). - Order intake was EUR 568 million (638). - Comparable net sales were EUR 592 million (624). - Comparable operating profit was EUR 10 million (-15). - Comparable result before taxes was EUR 0 million (-26). January-September 2013 (Q1-Q3/2012) - Net cash from operating activities was EUR 105 million (93). - Order intake was EUR 1,803 million (1,982). - Comparable net sales were EUR 1,814 million (1,963). - Comparable operating profit was EUR 31 million (-16). - Comparable result before taxes was EUR 2 million (-46). Guidance for 2013 changed: Revised guidance: Comparable net sales in 2013 are estimated to be approximately EUR 2.5 billion. Comparable operating profit is estimated to improve compared to 2012 and to be positive. Earlier guidance: Comparable net sales in 2013 are estimated to be at the same level as in 2012. Comparable operating profit is estimated to improve compared to 2012 and to be positive. Net sales and operating profit for 2012 have been restated for reasons of structural comparability. KEY FIGURES -------------------------------------------------------------------------------   Q3/13 Q3/12 Q1-Q3/13 Q1-Q3/12 2012 ------------------------------------------------------------------------------- Comparable figures ------------------------------------------------------------------------------- Comparable net sales, EUR m 592 624 1,814 1,963 2,597 ------------------------------------------------------------------------------- Comparable operating profit, EUR m 10 -15 31 -16 -50 ------------------------------------------------------------------------------- Comparable operating profit as % of net sales 1.7 -2.5 1.7 -0.8 -1.9 ------------------------------------------------------------------------------- Comparable result before income tax, EUR m 0 -26 2 -46 -88 ------------------------------------------------------------------------------- Reported figures ------------------------------------------------------------------------------- Reported net sales, EUR m 592 675 1,815 2,119 2,796 ------------------------------------------------------------------------------- Reported operating profit, EUR m 10 -21 30 -42 -101 ------------------------------------------------------------------------------- Reported result before income tax, EUR m 0 -32 1 -72 -139 ------------------------------------------------------------------------------- Net cash from operating activities, EUR m 28 44 105 93 172 ------------------------------------------------------------------------------- Net cash before financing activities, EUR m 2 20 40 22 78 ------------------------------------------------------------------------------- Earnings per share, EUR 0.01 -0.21 -0.03 -0.44 -0.85 ------------------------------------------------------------------------------- Return on capital employed (rolling 12 months), %     -1.5 -4.0 -4.9 ------------------------------------------------------------------------------- Return on capital employed (annualised), %     2.1 -2.6 -4.9 ------------------------------------------------------------------------------- Gearing ratio, %     73.8 71.3 71.2 ------------------------------------------------------------------------------- Equity ratio, %     44.9 45.7 45.6 ------------------------------------------------------------------------------- Personnel on average 9,033 11,345 9,060 11,462 11,214 ------------------------------------------------------------------------------- Net sales and operating profit for 2012 have been restated for reasons of structural comparability. Part of Ruukki Engineering's business was divested at the end of 2012. The units excluded from the arrangement have been part of Ruukki Metals since the start of 2013. Ruukki Engineering units transferred to Fortaco and other Ruukki Engineering units have been eliminated from comparable figures. PRESIDENT & CEO Sakari Tamminen: "Confidence in economic growth improved during the third quarter as several forward-looking economic indicators progressed. Also during the second quarter, GDP showed very modest growth in Europe. It seems as if demand has now been corrected to a new sustainable level. However, recovery is expected to be modest and economic growth is forecast to be around one per cent in 2014. Concerning Ruukki's most important markets, Germany, Sweden, Norway and Russia are expected to show better development than other markets. The situation in Finland continues to give particular cause for concern and it is hard to see any turn for the better in the near future. Finland has lost much export manufacturing industry and the change is a structural one. With regard to business activity, Ruukki's third quarter was largely the same as the second. Order intake was down 11% and net sales were down 5% year on year. This was due to the fall in steel prices as a result of lower market prices of raw materials compared to a year earlier. Ruukki Metals' order volumes were at the same level, but delivery volumes rose compared to a year earlier. Ruukki Building Products' order intake was at the same level year on year and up 6% quarter on quarter despite the fact that market conditions were not so good. Also Ruukki Building Systems' order intake and order book were at the same level as a year earlier. Orders were down clearly in the Nordic countries, although orders in Russia rose and the order book is strong in our Russian operations. Comparable operating profit rose year on year and was EUR 10 million. Normal seasonality was reflected in differences in profitability development in our business areas. Both Ruukki Building Products and Ruukki Building Systems achieved a positive result underpinned by improved gross margins and a normal summer season. On top of the holiday season, normal maintenance shutdowns at the rolling mills reduced Ruukki Metals' delivery volumes. These factors, coupled with lower average selling prices, weakened profitability. On the other hand, Ruukki Metals' results for the third quarter and for the previous quarter show that we have in practice achieved the aim of our cost savings programme - profitable operations at a capacity utilisation rate of 80%. Because no significant upturn in steel demand is expected in the main market in Europe during the next few years, Ruukki Metals will start to prepare a new efficiency programme to further improve competitiveness. These actions are aimed at a permanent annual improvement of around EUR 30 million in earnings performance. This means Ruukki's earlier permanent earnings improvement target of EUR 100 million increases now to EUR 130 million. Consolidated cash flow from operating activities was EUR 28 million for the third quarter and EUR 105 million since the start of the year. Net debt was at the same level as during the second quarter and gearing was 74%. Ruukki Building Products clearly improved operating profit and relative profitability year on year. This was particularly attributable to the efficiency programme and better gross margin. A more favourable geographical spread of sales of residential roofing products and more effective steering of sales of building components also contributed to operating profit growth compared to a year earlier. Relative profitability improved in all product groups. In Ruukki Building Systems, we successfully achieved our aim of turning the business around to profitability. This was mainly achieved as a result of the efficiency programme initiated in 2012 and a rise in the capacity utilisation rate in Russia. Profitability is moving ahead in the right direction, but we still have much to do to improve relative profitability especially in Northern Europe. Compared to a year earlier, order intake value and order volumes of special steel products were up. Sales of special steel products accounted for 34% of Ruukki Metals' net sales, which was the same as the previous quarter. However, net sales of special steel products were down 11% quarter on quarter because of lower average selling prices and seasonally smaller delivery volumes. We aim to considerably grow volumes of special steel products and to increase sales of special steels to EUR 850 million in 2015. Special steel products are notably more profitable than standard products, the volumes of which we intend to scale down as volumes of special steels rise. We expect average selling prices of steel products to remain stable during the fourth quarter of the year. Modest price rises are also not ruled out with regard to certain products and markets. We anticipate sales at our steel service centres to pick up slightly during the fourth quarter, but uncertain conditions in Europe will continue to impact on demand from mill customers. Good progress is being made with accelerating the growth of special steel products through new customers, new applications and new market areas. The aim is for an extensive sales and partner network covering all main market areas. Work continues on recruiting more than 40 sales and technical customer service experts. The result of our efforts on this front is expected to be visible mainly 2014 onwards. Ruukki Building Products has a good market position and is aiming for profitable growth especially through energy-efficient products and residential roofing products. We are also focusing on repeatable products and processes and on identifying new business opportunities for our good infrastructure construction products to improve profitability. In Ruukki Building Systems, our main aim is to improve relative profitability through better project management and more cost-efficient manufacturing. Ruukki's new business model has streamlined the management of operations, which in turn has contributed to improving the profitability of Building Products and Building Systems. Average selling prices of our steel products were lower than we expected during the first nine months of the year. Delivery volumes were up slightly year on year. Due to lower prices, we have revised our guidance with regard to net sales for the present financial year. We now estimate comparable net sales in 2013 to be approximately EUR 2.5 billion. Guidance with regard to comparable operating profit remains unchanged and is estimated to improve compared to 2012 and to be positive." Rautaruukki Corporation's full interim report for January-September is attached to this release. For further information, please contact Sakari Tamminen, President & CEO, tel. +358 20 592 9075 Mikko Hietanen, CFO, tel. +358 20 592 9030 News conference for analysts and the media A joint news conference in English both for analysts and the media will be hosted on Wednesday 23 October 2013 at 10.30am at Ruukki's head office, Suolakivenkatu 1, 00810 Helsinki. A live webcast of the event and presentation by the company's President & CEO Sakari Tamminen may be followed online on the company's website at www.ruukki.com/Investors starting at 10.30am EEST. This event can also be attended through a conference call by dialling the number below 5-10 minutes before the event begins: +44 20 7162 0077 (calls outside Finland) +358 9 2313 9201 (calls inside Finland) Access code: 937160 A replay of the webcast can be viewed on the company's website from approximately 4pm EEST. A replay of the conference call will be available until 31 October 2013 at: +44 20 7031 4064 (calls outside Finland) +358 9 2314 4681 (calls inside Finland) Access code: 937160 Rautaruukki Corporation Taina Kyllönen SVP, Marketing and Communications Ruukki specialises in steel and steel construction. We provide customers with energy-efficient steel solutions for better living, working and moving. We have around 9,000 employees and an extensive distribution and dealer network across some 30 countries including the Nordic countries, Russia and elsewhere in Europe and the emerging markets, such as India, China and South America. Net sales in 2012 totalled €2.8 billion. The company's share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS). www.ruukki.com DISTRIBUTION: NASDAQ OMX Helsinki Main media www.ruukki.com [HUG#1737512]