Rautaruukki Oyj Stock Exchange Release 24 October 2007 at 9.00
RAUTARUUKKI CORPORATION INTERIM REPORT JANUARY-SEPTEMBER 2007
The good market situation in the Group's core market areas and main customer
industries has been maintained throughout the report period. There was continued
brisk construction activity in the Nordic countries, the Baltics, Central
Eastern Europe and Russia. The order books of engineering customers, especially
those in the lifting, handling and transportation industry and in the energy
industry have remained strong and this has had a positive effect also on
Rautaruukki's deliveries. While the good demand for special steel and plate
products has continued, there are product-specific differences in the demand for
other products.
Net sales and result for January-September 2007 (comparable figures for Jan-Sept
2006)
The Group's net sales in January-September 2007 increased by 16 per cent to EUR
2,895 million on the comparable figure of EUR 2,502 million for
January-September 2006. The Group reported net sales of EUR 2,669 million for
January-September 2006. The comparable figures exclude the Nordic Reinforcing
units, which were part of the Group until 31 July 2006. Ruukki Construction's
net sales grew by 34 per cent to EUR 749 million (558) and Ruukki Engineering's
by 21 per cent to EUR 487 million (400). Ruukki Metals' net sales were EUR 1,658
million (1,708, comparable net sales 1,541).
The solutions businesses - Ruukki Construction and Ruukki Engineering -
accounted for 43 per cent (36) of net sales during the report period. Of net
sales, 83 per cent (78) came from Rautaruukki's core market areas: 32 per cent
(31) from Finland, 30 per cent (32) from the other Nordic countries and 21 per
cent (15) from Central Eastern Europe, Russia and Ukraine. The rest of Europe
accounted for 15 per cent (20) of net sales and other countries for 2 per cent
(2).
Operating profit for the report period was EUR 518 million, which is 18 per cent
of net sales. This represents an increase of EUR 170 million or 49 per cent on
the comparable operating profit of EUR 348 million reported last year. The Group
reported operating profit of EUR 362 million for January-September 2006. The
solutions businesses accounted for 38 per cent (37) of the Group's operating
profit. Ruukki Construction's operating profit almost doubled to EUR 117 million
(62), Ruukki Engineering's operating profit rose to EUR 81 million (74) and
Ruukki Metals' to EUR 340 million (253, comparable 239).
Net finance expense amounted to EUR 10 million (19). A marked decrease in net
debt caused the net interest expense to decrease from EUR 16 million last year
to EUR 7 million.
The share of associates' profits was EUR 3 million (35, of which Ovako accounted
for EUR 32 million).
Profit before taxes was EUR 512 million (378).
Group taxes were EUR 132 million (89) and the effective tax rate was 26 per cent
(27).
Profit for the period was EUR 379 million (288).
Diluted earnings per share were EUR 2.74 (2.09).
Return on capital employed over the past 12 months was 37.8 per cent (26.2) and
the return on equity was 33.6 per cent (25.3). Excluding the impact of the
capital gain arising from the divestment of Ovako, the return on capital
employed was 33.0 per cent and the return on equity was 27.9 per cent over the
past 12 months.
Balance sheet
The consolidated balance sheet total increased by EUR 129 million to
EUR 2,914 million compared to 30 September 2006. Since year-end 2006, the
balance sheet total has decreased by EUR 112 million.
Shareholders' equity at 30 September 2007 was EUR 1,906 million (1,619). Net
interest-bearing liabilities decreased to EUR 190 million (410).
Cash flow and financing
Cash flow from operating activities was EUR 247 million (205) and cash flow
after investing activities was EUR 112 million (143).
Net interest-bearing liabilities at 30 September 2007 were EUR 190 million
(410), compared to EUR 22 million at year-end 2006. During the report period,
the company completed early repayment of two high-interest callable subordinated
notes issued in September 2002. These two notes had an aggregate capital of EUR
104 million.
Working capital increased by EUR 225 million (95) during January-September 2007.
EUR 142 million of this increase was attributable to a rise in inventories and
EUR 54 million to a growth in trade receivables.
The equity ratio was 67.3 per cent (59.5) and net gearing 10.0 per cent (25.3).
At 30 September, the Group had liquid assets of EUR 41 million and a total of
EUR 300 million in unused revolving credit facilities with banks. At 30
September, shareholders' equity stood at EUR 1,906 million (1,619), or EUR 13.70
per share (11.85). In April, Rautaruukki paid to its shareholders EUR 207
million in dividends and an additional dividend of EUR 69 million out of the
capital gain arising from the divestment of Ovako.
Personnel
During the first nine months of 2007, the Group employed an average of 14,864
people (13,063). At 30 September, the headcount was 14,727 (13,129), an increase
of 1,598 persons year-on-year. The increase in headcount was mainly due to
acquisitions (Scanbridge, Omeo and AGJ) and an expansion of business activities
in Russia.
Capital expenditure
Cash flow from investing activities during the report period was EUR 134 million
(62).
Investments in tangible and intangible assets totalled EUR 112 million (90)
during January-September. The largest investments were related to expanding
Ruukki Construction's capacity in Eastern Europe and strengthening the company's
capability to deliver special products. During the report period, divestments of
subsidiaries and property plant and equipment amounted to EUR 13 million.
In January-September, EUR 40 million was spent on M&A arrangements. Property,
plant and equipment obtained through acquisitions increased by EUR 19 million
and goodwill by EUR 3 million. These arrangements had no material impact on the
amount of working capital.
Additionally, there was a positive cash flow of EUR 5 million during the report
period. This was mainly due to divestments taking place last year.
Gross investments in tangible and intangible assets in 2007 are expected to be
in the range of EUR 220 million, excluding any acquisitions or divestments.
Investments to increase Ruukki Construction's production capacity account for
approximately a third of this figure.
Shares and share capital
During the first nine months of 2007, Rautaruukki Oyj shares (RTRKS) were traded
for a total of EUR 6,608 million (3,537) on the OMX Nordic Exchange Helsinki.
The highest price quoted was EUR 52.50 in July and the lowest was EUR 27.38 in
January. The volume weighted average share price was EUR 39.30. At 30 September
2007, the share closed at EUR 42.49 and the company had a market capitalisation
of EUR 5,957 million (3,150).
The company's registered share capital at 30 September 2007 was EUR 238.3
million distributed across 140,194,524 shares. At the end of the report period,
the company had 1,476,937 treasury shares.
Employee warrants based on the 2003 bond loan with warrants have been publicly
traded on the OMX Nordic Exchange Helsinki since 24 May 2006. One warrant
entitles the holder to subscribe one Rautaruukki share at a price of EUR 1.70.
By 30 September 2007, warrants had been exercised to subscribe a total of
1,308,079 shares. The outstanding warrants entitle subscription to a total of
91,921 shares. The subscription period expires on 23 May 2009.
The Board of Directors is authorised to purchase a maximum of 12,000,000 of the
company's shares (8.56 per cent of the total number of shares issued). This
authorisation is valid for 18 months from the decision of the Annual General
Meeting on 20 March 2007. The Board of Directors had not exercised this
authorisation during the report period.
Likewise, the Board of Directors is authorised to dispose of a maximum of
13,785,381 treasury shares. The authorisation is valid until the close of the
2009 Annual General Meeting. On 20 March 2007, under the Board of Directors'
authorisation expiring at the close of the 2007 Annual General Meeting, the
company transferred 84,000 treasury shares to persons covered by the Group's
share bonus scheme 2004. On 3 August 2007, under the Board of Directors' present
authorisation, the company transferred a total of 225,194 treasury shares to
persons covered by the final incentive period, 2004-2006, of the Group's share
bonus scheme 2000. Seven hundred and fifty shares have been returned to the
company. Subsequent to this, the company has 1,476,937 treasury shares, which
had a market value of EUR 63.4 million at 30 September 2007.
At the end of the report period, the Board of Directors had no valid
authorisation to issue convertible bonds or bonds with warrants or to increase
the company's share capital.
Environmental issues
Rautaruukki's Raahe Works and the steam boilers at the Hämeenlinna Works in
Finland are included in the European Union's emissions trading scheme. In 2006,
the Raahe Works accounted for 99.2 per cent of Rautaruukki's carbon dioxide
emissions falling within the scope of emissions trading. The company's steel
section mill in Mo i Rana, Norway, comes under a similar Norwegian emissions
trading scheme.
The European Commission cut the emissions allowances in Finland's national
allocation plan by two million tonnes for the 2008-2012 trading period.
Consequently, this will result in an amendment to Finland's Emissions Trading
Act. Under a proposal by the Finnish government, also Rautaruukki's emissions
allowances will be reduced. While the exact allowances will not be known until
after the Act has been amended, in the case of Raahe it would mean a reduction
in emission limits of around four per cent compared to the 2005-2007 trading
period.
The company expects to incur costs of around EUR 3-5 million a year to purchase
the additional emissions allowances it needs during the 2008-2012 emissions
trading period.
In September 2007, Rautaruukki was included in the Dow Jones STOXX
Sustainability Index. The index includes leading European companies in terms of
sustainable development. Companies are included in the index on the basis of
annual assessment. Launched in 1999, the Dow Jones Sustainability Index (DJSI
World) is the first global index to track sustainability. The STOXX Index in the
Dow Jones index family that Rautaruukki has been included in was launched in
2001 to track the sustainability performance of European companies.
Improvement in cost-effectiveness
Ruukki United, the company's programme to harmonise ways of working and improve
efficiency, aims to achieve cost savings, compared with 2004 levels, of around
EUR 150 million by year-end 2008. EUR 75 million of this target had been
achieved by the end of the report period.
The Ruukki United programme also seeks to permanently free up some EUR 150
million of capital by year-end 2008. EUR 42 million of this target had been
achieved by the end of the report period. The company aims for a marked
reduction in stocks by the end of the 2007 financial year.
Impacts of the programme on staffing levels are ascertained on a
project-specific basis and any reductions are expected to be made mostly through
retirement and relocation.
Events after the report period
Rautaruukki held its annual Capital Market Day for investors and analysts in
Moscow and Obninsk, Russia on 1-2 October. At the Capital Market Day, the
company's management stated that it expects Ruukki Construction division's net
sales to grow organically to more than one and a half times by the end of 2010
from a current figure of around one billion euros. The share of special products
of Ruukki Metals division's net sales is expected to increase from a current
figure of 24 per cent to 40 per cent by the end of 2010.
In October, Rautaruukki signed a major agreement with construction company YIT
for total deliveries for a logistics and industrial park project in St
Petersburg, Russia. The order is worth EUR 10 million. Deliveries started in
September this year and will continue until February 2008. In addition,
Rautaruukki has signed a letter of option with YIT for a similar delivery for a
further eight buildings to be constructed on the site. The agreement further
strengthens Rautaruukki's position as a leading provider of metal-based
construction solutions in its core market area.
In October, Rautaruukki announced it had established a sales office in Sofia,
Bulgaria. This new sales office will enable the company to better respond to the
growing demand for office and commercial construction in Bulgaria. In addition,
the office will strengthen Rautaruukki's sales of construction products and
services in local markets.
As Rautaruukki reported on 22 October, around 450 members of the Union of
Salaried Employees (TU) began a strike on 22 October in Raahe, Finland. The
strike stopped hot-rolling production and the cutting lines at the Raahe Steel
Works. This has resulted in the stoppage of product manufacture at the works,
deliveries to customers and products for further processing within the company.
The financial effects incurred by company as a result of the dispute will depend
on the length of the strike.
In October, the first profile production lines started up at the company's new
plant in Romania. The plant will be fully operative in summer 2008 and will
produce steel frames, sandwich panels, roofing and cladding profiles and wall
and roofing cassettes. The new plant will enable Rautaruukki to serve the
rapidly growing demand for commercial construction and residential roofing in
Romania and Bulgaria. The investment is worth about EUR 35 million.
Near-term outlook
The good market situation in the Group's core market areas and in key customer
industries is expected to continue. Construction activity is expected to remain
brisk across the entire market area. It is anticipated the construction market
in Eastern Europe will grow at a faster rate than in other areas. Demand from
engineering industry customers is likely to remain strong in the lifting,
handling and transportation industry, as well as in the energy, shipbuilding and
offshore sectors.
While the good demand for special steel and plate products is expected to
continue, there are product-specific differences in the demand for other
products.
There are currently factors of uncertainty in the global economy that might
affect the demand for Rautaruukki's products. If the strike by the members of
the Union of Salaried Employees continues in Finland, it will affect the
company's financial performance during the fourth quarter.
Comparable net sales in 2007 are expected to develop in line with growth targets
set. Operating profit for 2007 will markedly exceed the comparative figure for
last year. The good market situation in the company's customer industries is
expected to continue. This will form a good platform for Rautaruukki in 2008.
This interim report is unaudited.
Helsinki, 24 October 2007
Rautaruukki Corporation
Board of Directors
DIVISIONS
Ruukki Construction
--------------------------------------------------------------------------------
| EUR million | Q1/0 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 | Q2/07 | Q3/07 |
| | 6 | | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 133 | 181 | 244 | 271 | 829 | 213 | 258 | 278 |
--------------------------------------------------------------------------------
| Operating | 8 | 21 | 33 | 39 | 101 | 33 | 40 | 45 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
| as % of net | 6 | 12 | 14 | 14 | 12 | 15 | 15 | 16 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
During January-September 2007, Ruukki Construction had net sales of EUR 749
million (558), up by 34 per cent on the corresponding figure a year earlier.
Operating profit increased to EUR 117 million (62). The division accounted for
26 per cent (21) of the Group's net sales. Acquisition of Ventall in Russia in
2006, as well as strong organic growth on the back of good demand and increased
deliveries through an investment programme to strengthen delivery capability,
led to higher net sales and operating profit during the report period. Net sales
grew particularly in Russia and the Nordic countries.
Strong demand and deliveries within building construction continued in the
Nordic countries, Russia and Central Eastern Europe. In the Baltics, there was
continued good demand for deliveries of building construction projects, but
demand for component deliveries has stabilised.
Office, commercial, industrial, logistics and sports complexes formed the focus
of systems and integrated systems within building construction. A pilot project
using an innovative concept for multi-storey construction in Ruoholahti,
Helsinki progressed as planned.
There was also continued good demand and deliveries within infrastructure
construction. Most deliveries focused on large transport infrastructure and
harbour projects already under way in Finland such as the Vuosaari Harbour and
E18 road projects. Rautaruukki is supplying steel structures for a number of
major bridge projects in Norway and Sweden and for the western ring road project
in St Petersburg, Russia.
Ruukki Construction's investments of around EUR 110 million to increase
production capacity in Central Eastern Europe, Finland and Russia are
progressing as planned and will strengthen the company's delivery capability.
The profile line at the new plant in Romania came on stream in October as
planned. Ruukki Construction has also expanded its sales office network into
Bulgaria and Croatia.
Ruukki Engineering
--------------------------------------------------------------------------------
| EUR million | Q1/0 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 | Q2/07 | Q3/07 |
| | 6 | | | | | | | |
--------------------------------------------------------------------------------
| Net sales | 132 | 142 | 127 | 157 | 557 | 167 | 163 | 157 |
--------------------------------------------------------------------------------
| Operating | 25 | 21 | 28 | 33 | 106 | 32 | 27 | 23 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
| as % of | 19 | 15 | 22 | 21 | 19 | 19 | 16 | 14 |
| turnover | | | | | | | | |
--------------------------------------------------------------------------------
During January-September 2007, Ruukki Engineering had net sales of EUR 487
million (400), up by 21 per cent on the corresponding figure a year earlier.
Higher net sales were attributable to the continued strong market situation, the
acquisition of Omeo Mekaniska Verkstad AB, completed in January, and the
acquisition of Hungarian company Aprítógépgyár Zrt. (AGJ), completed in May. The
division accounted for 17 per cent (15) of the Group's net sales. Operating
profit for January-September 2007 amounted to EUR 81 million (74). The operating
margin was weaker compared to the previous quarter mainly as a result of lower
delivery volumes in the Norwegian unit for wind turbine projects. Integration of
completed acquisitions into Ruukki Engineering is underway and the performance
of these units is expected to improve during the course of 2008. Compared to the
third quarter, Ruukki Engineering's operating profit is expected to improve
somewhat during the fourth quarter.
Order books remained strong in all Ruukki Engineering's customer sectors.
Acquisition of the Hungarian company AGJ in May this year has provided major new
customers in the lifting, handling and transportation equipment industry and
expanded the boom product range. In addition to materials handling booms,
Rautaruukki is now also able to supply booms for earthmoving machinery.
Demand is still growing in the wind turbine industry. Rautaruukki provides the
gear box frames, base frames and crane grids for wind turbines. Demand in the
paper and wood processing industry and in the shipbuilding and offshore sectors
has continued strong in Europe.
In August, Ruukki Engineering signed an agreement with Wärtsilä that will double
the volume of Rautaruukki's common base frame and oil sump deliveries in
Finland. Deliveries to Italy and China will also increase.
Ruukki Metals
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 | Q2/07 | Q3/07 |
--------------------------------------------------------------------------------
| Net sales | 591 | 604 | 514 | 583 | 2 291 | 570 | 588 | 500 |
--------------------------------------------------------------------------------
| Operating | 77 | 87 | 89 | 111 | 364 | 119 | 117 | 104 |
| profit | | | | | | | | |
--------------------------------------------------------------------------------
| as % of net | 13 | 14 | 17 | 19 | 16 | 21 | 20 | 21 |
| sales | | | | | | | | |
--------------------------------------------------------------------------------
During January-September 2007, Ruukki Metals had net sales of EUR 1,658 million
(1,708), up by 8 per cent against the comparable figure of EUR 1,541 million a
year earlier. The comparable figures exclude the Nordic Reinforcing units, which
were part of the business until 31 July 2006. Operating profit increased by 34
per cent to EUR 340 million (253). Comparable operating profit for the
corresponding period a year earlier was EUR 239 million. Improved profitability
was attributable to increased sales prices and a change in the sales structure.
Special products continued to form an increasing share of sales and accounted
for 24 per cent (19) of Ruukki Metals' sales during the third quarter. The
division accounted for 57 per cent (64) of consolidated net sales.
Good demand continued in the division's core market areas and customer
industries. Higher than normal wholesaler stocks in Europe particularly affected
sales of galvanised products. The investment to increase the capacity of
high-strength steels at the Raahe Works in Finland came on stream in September.
A longer maintenance shutdown than last year resulted in a reduction in delivery
volumes of plate products. In addition, Ruukki Metals' sales were lower during
the third quarter due to seasonal fluctuations in the division's core market
area.
As part of actions to enhance the business model in Finland, Ruukki Metals
decided in August to focus small batch deliveries on the Hyvinkää Service
Centre. In the same context, it was decided to review the role of the works and
service centres as well as the product range. The related investments of around
EUR 4 million are not expected to have a material impact on Ruukki Metals'
result for the fourth quarter.
In Poland, the Zyrardow Service Centre was relocated to the panel and steel
structure plant in Oborniki. The prefabrication capacity of the service centre
is being increased and diversified. This will improve the company's ability to
deliver special products already during the fourth quarter.
In November, the Hyvinkää Service Centre will begin using laser cutting
technology to cut large tubes and cold-formed sections used in the engineering
industry and construction. Laser technology will enable a new type of design for
heavy structures and further strengthen the company's capability to deliver
special products.
Ruukki Production
--------------------------------------------------------------------------------
| 1000 tonnes | Q1/0 | Q2/06 | Q3/06 | Q4/06 | 2006 | Q1/07 | Q2/07 | Q3/07 |
| | 6 | | | | | | | |
--------------------------------------------------------------------------------
| Steel | 888 | 860 | 725 | 744 | 3 217 | 703 | 672 | 610 |
| production | | | | | | | | |
--------------------------------------------------------------------------------
| Steel | 709 | 693 | 705 | 744 | 2 853 | 703 | 672 | 610 |
| production | | | | | | | | |
| in Raahe | | | | | | | | |
--------------------------------------------------------------------------------
Production ran normally at all works. Steel output during January-September 2007
was 1,985,000 tonnes. The comparable figure for 2006, excluding the Mo i Rana
reinforcing steel production divested, was 2,107,000 tonnes.
There was a longer shutdown at the Raahe plate mill than during the
corresponding period a year ago to allow for the installation of a direct
quenching unit, which came on stream in September. The high-strength and
abrasion-resistant steels made by the unit will enable the company to meet the
growing needs of the lifting, handling and transportation industry in
particular. The unit will also enable the company to considerably expand the
range, improve delivery capability and increase the production volumes of
high-strength steels. Production of direct quenched plates has started well at
the plate mill and the company can significantly increase the output of special
steels during the fourth quarter.
Production of plates and hot-rolled cut lengths has remained strong. Production
volumes of galvanised products were limited during the third quarter for
profitability reasons. Preparations are under way to adjust steel production
during the fourth quarter in line with demand and stock levels.
TABLES
This interim report has been prepared in accordance with IAS 34 and is in
conformity with the accounting policies published in the annual financial
statements. The financial indicators have been calculated in the same way as in
the annual financial statements.
Individual figures and totals appearing in the tables have been rounded to the
nearest full million of euros. This means that they will not always tally when
added together or subtracted. The figures given in tables are unaudited.
--------------------------------------------------------------------------------
| SUMMARY CONSOLIDATED INCOME STATEMENT |
--------------------------------------------------------------------------------
| EUR million | Q3/07 | Q3/06 | Q1-Q3/0 | Q1-Q3/0 | 2006 |
| | | | 7 | 6 | |
--------------------------------------------------------------------------------
| Net sales | 935 | 885 | 2 895 | 2 669 | 3 682 |
--------------------------------------------------------------------------------
| Other operating income | 6 | 13 | 16 | 24 | 32 |
--------------------------------------------------------------------------------
| Operating expenses | -741 | -719 | -2 279 | -2 218 | -3 037 |
--------------------------------------------------------------------------------
| Depreciation, amortisation | -39 | -38 | -114 | -113 | -148 |
| and impairment losses | | | | | |
--------------------------------------------------------------------------------
| Operating profit | 162 | 140 | 518 | 362 | 529 |
--------------------------------------------------------------------------------
| Finance income and expense | -4 | -6 | -10 | -19 | -22 |
--------------------------------------------------------------------------------
| Share of results of | 1 | 7 | 3 | 35 | 129 |
| associated companies | | | | | |
--------------------------------------------------------------------------------
| Profit before taxes | 159 | 141 | 512 | 378 | 635 |
--------------------------------------------------------------------------------
| Taxes | -41 | -36 | -132 | -89 | -134 |
--------------------------------------------------------------------------------
| Profit for the period | 118 | 105 | 380 | 288 | 501 |
--------------------------------------------------------------------------------
| Attributable to: | | | | | |
--------------------------------------------------------------------------------
| Equity shareholders of the | 117 | 105 | 379 | 288 | 501 |
| parent | | | | | |
--------------------------------------------------------------------------------
| Minority interests | 0 | 0 | 1 | 0 | 0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Diluted earnings per share, | 0.85 | 0.76 | 2.74 | 2.09 | 3.65 |
| EUR | | | | | |
--------------------------------------------------------------------------------
| Basic earnings per share, | 0.85 | 0.76 | 2.74 | 2.11 | 3.66 |
| EUR | | | | | |
--------------------------------------------------------------------------------
| Operating profit as % of | 17.3 | 15.9 | 17.9 | 13.6 | 14.4 |
| net sales | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SUMMARY CONSOLIDATED BALANCE SHEET | 30 Sept | 30 Sept | 31 Dec |
--------------------------------------------------------------------------------
| EUR million | 2007 | 2006 | 2006 |
--------------------------------------------------------------------------------
| ASSETS | | | |
--------------------------------------------------------------------------------
| Non-current assets | 1 475 | 1 562 | 1 454 |
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 738 | 556 | 586 |
--------------------------------------------------------------------------------
| Trade and other receivables | 660 | 629 | 624 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 41 | 38 | 361 |
--------------------------------------------------------------------------------
| | 2 914 | 2 785 | 3 026 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | |
--------------------------------------------------------------------------------
| Equity | | | |
--------------------------------------------------------------------------------
| Equity attributable to | 1 906 | 1 619 | 1 832 |
| shareholders of the parent | | | |
--------------------------------------------------------------------------------
| Minority interests | 3 | 1 | 1 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 201 | 220 | 218 |
--------------------------------------------------------------------------------
| Other | 201 | 217 | 226 |
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Interest-bearing | 31 | 228 | 164 |
--------------------------------------------------------------------------------
| Trade payables and other | 573 | 501 | 584 |
| liabilities | | | |
--------------------------------------------------------------------------------
| | 2 914 | 2 785 | 3 026 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| SUMMARY CASH FLOW STATEMENT | | | |
--------------------------------------------------------------------------------
| EUR million | Q1-Q3/07 | Q1-Q3/06 | 2006 |
--------------------------------------------------------------------------------
| Profit for the period | 379 | 288 | 501 |
--------------------------------------------------------------------------------
| Adjustments | 251 | 179 | 168 |
--------------------------------------------------------------------------------
| Cash flow before change in working | 629 | 467 | 669 |
| capital | | | |
--------------------------------------------------------------------------------
| Change in working capital | -225 | -95 | -76 |
--------------------------------------------------------------------------------
| Financing items and taxes | -158 | -167 | -197 |
--------------------------------------------------------------------------------
| Cash flow from operating activities | 247 | 205 | 396 |
--------------------------------------------------------------------------------
| Cash flow from investing activities | -134 | -62 | 140 |
--------------------------------------------------------------------------------
| Cash flow before financing | 112 | 143 | 536 |
| activities | | | |
--------------------------------------------------------------------------------
| Dividends paid* | -276 | -191 | -191 |
--------------------------------------------------------------------------------
| Change in liabilities | -156 | -76 | -147 |
--------------------------------------------------------------------------------
| Change in cash and cash equivalents | -320 | -124 | 198 |
--------------------------------------------------------------------------------
| *) Dividends paid in 2007 include an extra dividend totalling EUR 69 million |
| out of the capital gain arising from the divestment of Ovako. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| KEY FIGURES | Q1-Q3/07 | Q1-Q3/06 | 2006 |
--------------------------------------------------------------------------------
| Net sales, EUR m | 2 895 | 2 669 | 3 682 |
--------------------------------------------------------------------------------
| Operating profit, EUR m | 518 | 362 | 529 |
--------------------------------------------------------------------------------
| as % of net sales | 17.9 | 13.6 | 14.4 |
--------------------------------------------------------------------------------
| Profit before taxes, EUR m | 512 | 378 | 635 |
--------------------------------------------------------------------------------
| as % of net sales | 17.7 | 14.2 | 17.3 |
--------------------------------------------------------------------------------
| Profit for the period, EUR m | 379 | 288 | 501 |
--------------------------------------------------------------------------------
| as % of net sales | 13.1 | 10.8 | 13.6 |
--------------------------------------------------------------------------------
| Return on capital employed*, | 37.8 | 26.2 | 31.5 |
| % | | | |
--------------------------------------------------------------------------------
| Return on equity*, % | 33.6 | 25.3 | 30.1 |
--------------------------------------------------------------------------------
| Equity ratio, % | 67.3 | 59.5 | 61.6 |
--------------------------------------------------------------------------------
| Gearing ratio, % | 10.0 | 25.3 | 1.2 |
--------------------------------------------------------------------------------
| Net interest-bearing | 190 | 410 | 22 |
| liabilities, EUR m | | | |
--------------------------------------------------------------------------------
| Equity per share, EUR | 13.7 | 11.85 | 13.26 |
--------------------------------------------------------------------------------
| Personnel on average | 14 864 | 13 063 | 13 121 |
--------------------------------------------------------------------------------
| Number of shares | 140 194 524 | 139 070 495 | 139 957 418 |
--------------------------------------------------------------------------------
| - excluding treasury shares | 138 717 587 | 136 768 798 | 138 172 037 |
--------------------------------------------------------------------------------
| - diluted, average | 138 495 687 | 137 749 903 | 137 144 515 |
--------------------------------------------------------------------------------
| Percentage of treasury shares | 1.05 | 1.66 | 1.28 |
| of total shares issued, % | | | |
--------------------------------------------------------------------------------
| * Based on previous 12 months | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGES IN EQUITY Q1-Q3/2007 |
--------------------------------------------------------------------------------
| EUR million |
--------------------------------------------------------------------------------
| | Attributable to equity shareholders of the parent |
--------------------------------------------------------------------------------
| | Share | Share | Fair | Trans- | Ret-ain | Total | Min-or |
| | cap-i | prem. | value | lation | ed | | ity |
| | tal | act. | and | diff. | earn-in | | int. |
| | | | other | | gs | | |
| | | | re-ser | | | | |
| | | | ves | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 1 | 238 | 220 | 44 | -3 | 1 333 | 1 832 | 1 |
| JAN | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
| hedging | | | | | | | |
--------------------------------------------------------------------------------
| Transferred to | | | -33 | | | -33 | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | | | 9 | | | 9 | |
--------------------------------------------------------------------------------
| Disposal of | | | -3 | | 3 | 0 | |
| treasury | | | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | -3 | -3 | -6 | |
| translation | | | | | | | |
| difference | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | -276 | -276 | |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 379 | 379 | 1 |
| period | | | | | | | |
--------------------------------------------------------------------------------
| Acquisition of | | | | | | | 1 |
| subsidiaries | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 30 | 238 | 220 | 17 | -6 | 1 436 | 1 906 | 3 |
| SEP | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CHANGE IN EQUITY Q1-Q3/2006 |
--------------------------------------------------------------------------------
| EUR million |
--------------------------------------------------------------------------------
| | Attributable to equity shareholders of the parent |
--------------------------------------------------------------------------------
| | Share | Share | Fair | Trans- | Ret-ain | Total | Min-or |
| | cap-i | prem. | value | lation | ed | | ity |
| | tal | act. | and | diff. | earn-in | | int. |
| | | | other | | gs | | |
| | | | re-ser | | | | |
| | | | ves | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 1 | 236 | 220 | 31 | -5 | 1 016 | 1 497 | 1 |
| JAN | | | | | | | |
--------------------------------------------------------------------------------
| Cash flow | | | | | | | |
| hedging | | | | | | | |
--------------------------------------------------------------------------------
| Transferred to | | | 27 | | | 27 | |
| equity | | | | | | | |
--------------------------------------------------------------------------------
| Deferred taxes | | | -7 | | | -7 | |
--------------------------------------------------------------------------------
| Equity-settled | | | 2 | | | 2 | |
| share-based | | | | | | | |
| payment | | | | | | | |
| transactions | | | | | | | |
--------------------------------------------------------------------------------
| Disposal of | | | -4 | | 6 | 2 | |
| treasury | | | | | | | |
| shares | | | | | | | |
--------------------------------------------------------------------------------
| Change in | | | | 1 | | 1 | |
| translation | | | | | | | |
| difference | | | | | | | |
--------------------------------------------------------------------------------
| Dividend | | | | | -191 | -191 | |
| distribution | | | | | | | |
--------------------------------------------------------------------------------
| Profit for the | | | | | 288 | 288 | |
| period | | | | | | | |
--------------------------------------------------------------------------------
| EQUITY AT 30 | 236 | 220 | 49 | -4 | 1 119 | 1 619 | 1 |
| SEP | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES BY DIVISION |
--------------------------------------------------------------------------------
| EUR million | Q1-Q3/07 | Q1-Q3/06 | 2006 | Q1-Q3/06 | 2006 |
| | | | | pro forma | pro forma |
--------------------------------------------------------------------------------
| Ruukki | 749 | 558 | 829 | 558 | 829 |
| Construction | | | | | |
--------------------------------------------------------------------------------
| Ruukki Engineering | 487 | 400 | 557 | 400 | 557 |
--------------------------------------------------------------------------------
| Ruukki Metals | 1 658 | 1 708 | 2 291 | 1 541 | 2 124 |
--------------------------------------------------------------------------------
| Group management | 0 | 2 | 4 | 2 | 4 |
| and other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated net | 2 895 | 2 669 | 3 682 | 2 502 | 3 515 |
| sales | | | | | |
--------------------------------------------------------------------------------
| Pro Forma=excluding the Nordic Reinforcing units |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| OPERATING PROFIT BY DIVISION |
--------------------------------------------------------------------------------
| EUR million | Q1-Q3/07 | Q1-Q3/06 | 2006 | Q1-Q3/06 | 2006 |
| | | | | pro forma | pro forma |
--------------------------------------------------------------------------------
| Ruukki | 117 | 62 | 101 | 62 | 101 |
| Construction | | | | | |
--------------------------------------------------------------------------------
| Ruukki Engineering | 81 | 74 | 106 | 74 | 106 |
--------------------------------------------------------------------------------
| Ruukki Metals | 340 | 253 | 364 | 239 | 350 |
--------------------------------------------------------------------------------
| Group management | -20 | -26 | -42 | -26 | -42 |
| and other units | | | | | |
--------------------------------------------------------------------------------
| Consolidated | 518 | 362 | 529 | 348 | 515 |
| operating profit | | | | | |
--------------------------------------------------------------------------------
| Pro Forma=excluding the Nordic Reinforcing units |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NET SALES |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 | Q2/07 | Q3/07 |
--------------------------------------------------------------------------------
| Ruukki | 133 | 181 | 244 | 271 | 213 | 258 | 278 |
| Construction | | | | | | | |
--------------------------------------------------------------------------------
| Ruukki Engineering | 132 | 142 | 127 | 157 | 167 | 163 | 157 |
--------------------------------------------------------------------------------
| Ruukki Metals | 591 | 604 | 514 | 583 | 570 | 588 | 500 |
--------------------------------------------------------------------------------
| Group management | 0 | 1 | 0 | 2 | 0 | 0 | 0 |
| and other units | | | | | | | |
--------------------------------------------------------------------------------
| Consolidated net | 856 | 928 | 885 | 1 013 | 950 | 1 009 | 935 |
| sales | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 | Q2/07 | Q3/07 |
--------------------------------------------------------------------------------
| Ruukki | 8 | 21 | 33 | 39 | 33 | 40 | 45 |
| Construction | | | | | | | |
--------------------------------------------------------------------------------
| Ruukki Engineering | 25 | 21 | 28 | 33 | 32 | 27 | 23 |
--------------------------------------------------------------------------------
| Ruukki Metals | 77 | 87 | 89 | 111 | 119 | 117 | 104 |
--------------------------------------------------------------------------------
| Group management | -15 | -2 | -9 | -16 | -6 | -5 | -10 |
| and other units | | | | | | | |
--------------------------------------------------------------------------------
| Consolidated | 95 | 127 | 140 | 167 | 178 | 178 | 162 |
| operating profit | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY NET SALES (PRO FORMA) EXCLUDING NORDIC REINFORCING UNITS |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 | Q2/07 | Q3/07 |
--------------------------------------------------------------------------------
| Ruukki | 133 | 181 | 244 | 271 | 213 | 258 | 278 |
| Construction | | | | | | | |
--------------------------------------------------------------------------------
| Ruukki Engineering | 132 | 142 | 127 | 157 | 167 | 163 | 157 |
--------------------------------------------------------------------------------
| Ruukki Metals | 521 | 523 | 497 | 583 | 570 | 588 | 500 |
--------------------------------------------------------------------------------
| Group management | 0 | 1 | 0 | 2 | 0 | 0 | 0 |
| and other units | | | | | | | |
--------------------------------------------------------------------------------
| Consolidated net | 786 | 848 | 868 | 1 013 | 950 | 1 009 | 935 |
| sales | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| QUARTERLY OPERATING PROFIT (PRO FORMA) EXCLUDING NORDIC REINFORCING UNITS |
--------------------------------------------------------------------------------
| EUR million | Q1/06 | Q2/06 | Q3/06 | Q4/06 | Q1/07 | Q2/07 | Q3/07 |
--------------------------------------------------------------------------------
| Ruukki | 8 | 21 | 33 | 39 | 33 | 40 | 45 |
| Construction | | | | | | | |
--------------------------------------------------------------------------------
| Ruukki Engineering | 25 | 21 | 28 | 33 | 32 | 27 | 23 |
--------------------------------------------------------------------------------
| Ruukki Metals | 71 | 79 | 90 | 111 | 119 | 117 | 104 |
--------------------------------------------------------------------------------
| Group management | -15 | -2 | -9 | -16 | -6 | -5 | -10 |
| and other units | | | | | | | |
--------------------------------------------------------------------------------
| Consolidated | 89 | 119 | 141 | 167 | 178 | 178 | 162 |
| operating profit | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| NET SALES BY REGION |
--------------------------------------------------------------------------------
| as % of net sales | Q1-Q3/07 | Q1-Q3/06 | 2006 |
--------------------------------------------------------------------------------
| Finland | 32 | 31 | 31 |
--------------------------------------------------------------------------------
| Other Nordic countries | 30 | 32 | 31 |
--------------------------------------------------------------------------------
| Central Eastern Europe, | 21 | 15 | 17 |
| Russia and Ukraine | | | |
--------------------------------------------------------------------------------
| Rest of Europe | 15 | 20 | 19 |
--------------------------------------------------------------------------------
| Other countries | 2 | 2 | 2 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CONTINGENT LIABILITIES |
--------------------------------------------------------------------------------
| EUR million | Sept 07 | Sept 06 | Dec 06 |
--------------------------------------------------------------------------------
| Mortgaged real estates | 23 | 26 | 26 |
--------------------------------------------------------------------------------
| Pledges given | 6 | 5 | 5 |
--------------------------------------------------------------------------------
| Collateral | | | |
--------------------------------------------------------------------------------
| Given on behalf of others | 5 | 4 | 5 |
--------------------------------------------------------------------------------
| Leasing and rental responsibilities | 114 | 127 | 100 |
--------------------------------------------------------------------------------
| Other financial liabilities | 0 | 9 | 11 |
--------------------------------------------------------------------------------
Subsequent to the divestment of the operating companies of Oy Ovako Ab, both Oy
Ovako Ab and its subsidiary Ovako Svenska AB were put into voluntary liquidation
and most of Oy Ovako Ab's assets were distributed to shareholders as a
disbursement. The shareholders (Rautaruukki Corporation, AB SKF and Wärtsilä
Corporation) have, as required under the Finnish Companies Act, submitted to the
liquidator a directly enforceable guarantee as surety against payment of the
disbursements.
--------------------------------------------------------------------------------
| VALUES OF DERIVATIVE CONTRACTS AT 30 SEPTEMBER 2007, EUR million |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| CASH FLOW HEDGES INCLUDED IN HEDGE ACCOUNTING |
--------------------------------------------------------------------------------
| | Nominal value | Fair value |
--------------------------------------------------------------------------------
| Zinc derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts * | 30,000 | 14.1 |
--------------------------------------------------------------------------------
| Electricity derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts ** | 1 247 | 9.0 |
--------------------------------------------------------------------------------
| * tonnes |
--------------------------------------------------------------------------------
| ** GWh |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| DERIVATIVES NOT INCLUDED IN HEDGE ACCOUNTING |
--------------------------------------------------------------------------------
| | Nominal value | Fair value |
--------------------------------------------------------------------------------
| Interest rate derivatives | | |
--------------------------------------------------------------------------------
| Interest rate swaps | 25 | 0.2 |
--------------------------------------------------------------------------------
| Foreign currency derivatives | | |
--------------------------------------------------------------------------------
| Forward contracts | 755 | -14.5 |
--------------------------------------------------------------------------------
| Options | | |
--------------------------------------------------------------------------------
| Bought | 75 | -1.1 |
--------------------------------------------------------------------------------
| Sold | 75 | -1.7 |
--------------------------------------------------------------------------------
| | | -2.8 |
--------------------------------------------------------------------------------
The unrealised result of cash flow hedges is recognised in equity to the extent
the hedge is effective. Other changes in fair value are recorded through profit
and loss.
--------------------------------------------------------------------------------
| CHANGES IN PLANT, PROPERTY AND EQUIPMENT |
--------------------------------------------------------------------------------
| EUR million | Q1-Q3/07 | Q1-Q3/06 | 2006 |
--------------------------------------------------------------------------------
| Carrying value at start of period | 1 043 | 1 033 | 1 033 |
--------------------------------------------------------------------------------
| Increase | 106 | 79 | 130 |
--------------------------------------------------------------------------------
| Increase through acquisitions | 13 | 51 | 71 |
--------------------------------------------------------------------------------
| Decrease | -5 | -8 | -19 |
--------------------------------------------------------------------------------
| Decrease through divestments | 0 | -42 | -42 |
--------------------------------------------------------------------------------
| Depreciation and value adjustments | -96 | -101 | -130 |
--------------------------------------------------------------------------------
| Exchange rate differences | 1 | -1 | -1 |
--------------------------------------------------------------------------------
| Carrying value at end of period | 1 061 | 1 011 | 1 043 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| TRANSACTIONS WITH RELATED PARTIES (ASSOCIATED COMPANIES) |
--------------------------------------------------------------------------------
| EUR million | Q1-Q3/07 | Q1-Q3/06 | 2006 |
--------------------------------------------------------------------------------
| Sales to associated companies | 18 | 21 | 29 |
--------------------------------------------------------------------------------
| Purchases from associated companies | 5 | 23 | 27 |
--------------------------------------------------------------------------------
| Trade and other receivables | 5 | 6 | 10 |
| at 30 September | | | |
--------------------------------------------------------------------------------
| Trade and other creditors | 1 | 7 | 2 |
| at 30 September | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INVESTMENT COMMITMENTS* | |
--------------------------------------------------------------------------------
| EUR million | after 30 Sept 2007 |
--------------------------------------------------------------------------------
| Maintenance investments | 46 |
--------------------------------------------------------------------------------
| Development investments and investments in special | 163 |
| products | |
--------------------------------------------------------------------------------
| Total | 209 |
--------------------------------------------------------------------------------
| *Investment commitments include the estimated costs of projects that have |
| received permission to go ahead. |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| INFORMATION ABOUT ACQUISITIONS* | | |
--------------------------------------------------------------------------------
| EUR million | Fair value | Acquired company's |
| | | carrying amount |
--------------------------------------------------------------------------------
| Acquisition cost | | |
--------------------------------------------------------------------------------
| - including conditional purchase | 19 | |
| price | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets and liabilities of acquired | | |
| companies (carrying value) | | |
--------------------------------------------------------------------------------
| Non-current assets | 19 | 13 |
--------------------------------------------------------------------------------
| Current assets | | |
--------------------------------------------------------------------------------
| Inventories | 9 | 9 |
--------------------------------------------------------------------------------
| Trade and other receivables | 12 | 11 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 2 | 2 |
--------------------------------------------------------------------------------
| Total assets | 42 | 35 |
--------------------------------------------------------------------------------
| Non-current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing | 3 | 4 |
--------------------------------------------------------------------------------
| Other | 2 | 2 |
--------------------------------------------------------------------------------
| Current liabilities | | |
--------------------------------------------------------------------------------
| Interest-bearing | 3 | 3 |
--------------------------------------------------------------------------------
| Other | 16 | 15 |
--------------------------------------------------------------------------------
| Total liabilities | 24 | 24 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | 16 | 12 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Acquisition cost | 19 | |
--------------------------------------------------------------------------------
| Goodwill | 3 | |
--------------------------------------------------------------------------------
| Acquisition cost paid in cash | 19 | |
--------------------------------------------------------------------------------
| Cash and cash equivalents of the | 2 | |
| acquired subsidiary | | |
--------------------------------------------------------------------------------
| Impact on cash flow | 17 | |
--------------------------------------------------------------------------------
| *)Includes information about the following acquisitions: AB Omeo Mekaniska |
| Verkstad, Scanbridge AS, Aprítógépgyár Zrt. and redemption of the shares of |
| Teräsportti Oy. |
--------------------------------------------------------------------------------
FURTHER INFORMATION IS AVAILABLE FROM
Sakari Tamminen, President & CEO, tel. +358 20 592 9075
Mikko Hietanen, CFO, tel. +358 20 592 9030
Rautaruukki Corporation
Anne Pirilä
SVP, Corporate Communications and Investor Relations
Rautaruukki supplies metal-based components, systems and integrated systems to
the construction and mechanical engineering industries. The company has a wide
selection of metal products and services. Rautaruukki has operations in 24
countries and employs 14,500 people. Net sales in 2006 totalled EUR 3.7 billion.
The company's share is quoted on the OMX Nordic Exchange Helsinki (Rautaruukki
Oyj: RTRKS). The Corporation has used the marketing name Ruukki since 2004.
www.ruukki.com
DISTRIBUTION
OMX Nordic Exchange Helsinki
Main media
www.ruukki.com
