Rautaruukki Corporation Financial statement bulletin for 2012: Steel business made a loss in a difficult market environment, clear improvement in consolidated cash flow

Rautaruukki Corporation Financial statement bulletin 15 February 2013 at 9am EET October-December 2012 (Q4/2011) - Net cash from operating activities was EUR 79 million (163) - Order intake was EUR 651 million (651) - Comparable net sales were down 6% at EUR 676 million (718) - Comparable operating profit was -EUR 39 million (-40), equating to -6% of net sales - Comparable result before taxes was -EUR 48 million (-50), equating to -7% of net sales January-December 2012 (2011) - Net cash from operating activities was EUR 172 million (114) - Order intake was up 3% at EUR 2,767 million (2,675) - Comparable net sales were EUR 2,789 million (2,797) - Comparable operating profit was -EUR 65 million (56), equating to -2% of net sales - Comparable result before taxes was -EUR 103 million (22), equating to -4% of net sales Dividend proposal The Board of Directors proposes payment of a dividend of EUR 0.20 per share (0.50), to make a total dividend payout of EUR 28 million (69). Estimate of the financial outlook for 2013 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. KEY FIGURES -------------------------------------------------------------------------     Q4/12 Q4/11 2012 2011 ------------------------------------------------------------------------- Comparable figures Comparable net sales, EUR m   676 718 2,789 2,797 Comparable operating profit, EUR m   -39 -40 -65 56 Comparable operating profit as % of net sales   -5.8 -5.6 -2.3 2.0 Comparable result before income tax, EUR m   -48 -50 -103 22 Reported figures Reported net sales, EUR m   677 718 2,796 2,798 Reported operating profit, EUR m   -58 -47 -99 22 Reported result before income tax, EUR m   -67 -56 -137 -12 Net cash from operating activities, EUR m   79 163 172 114 Net cash before financing activities, EUR m   56 126 78 -57 Earnings per share, EUR   -0.41 -0.30 -0.83 -0.07 Dividend per share, EUR       0.20* 0.50 Return on capital employed, %       -4.8 1.3 Gearing ratio, %       71.4 60.4 Equity ratio, %       45.5 48.5 Personnel on average   10,468 11,493 11,214 11,821 ------------------------------------------------------------------------- *Board of Directors' proposal President & CEO Sakari Tamminen: Ruukki's business environment over the past year was overshadowed by the European downturn, low utilised capacity following weakened competitiveness in the manufacturing industry in Europe and, during the autumn, a slowdown in economic growth in China. All these factors resulted in a marked decrease year on year in demand for steel in Europe. The economic outlook has picked up a little as confidence is gradually being restored in the financial markets in Europe and economic growth in China is showing signs of picking up. Nevertheless, the European economy is not expected to return to the growth track until the second half of the current year. As regards Ruukki's main markets, the German and Scandinavian economies are expected to show moderate growth during 2013, economic activity in Finland is expected to remain at the same level as in 2012 and growth in Russia is expected to continue to outpace global growth. Activity in the construction markets developed reasonably well during the early part of last year, but weakened towards the end of the year, especially in commercial construction, and the rest of the year was weak. Residential construction activity was better. Characteristic for 2012 was that in a weak business environment, the prices of steel products in Europe fell practically in pace with the fall in the prices of raw materials. In our steel business, raw material costs are reflected after a delay of about one quarter, which is why the operating result showed a loss. As was the case for the previous quarter, Ruukki posted a loss for the fourth quarter mostly because of lower average prices in the steel business. Comparable operating profit for the entire year was negative at -EUR 65 million. Order intake during the fourth quarter was at the same level as a year earlier, but order intake for the year as a whole was up slightly year on year in both the construction and the steel businesses. Consolidated net sales for 2012 were almost at the same level as for the previous year. Net cash from operating activities was good at EUR 172 million, a clear improvement compared to the previous year. In the prevailing uncertain market environment, the past year clearly showed the necessity of the efficiency projects we initiated earlier in the year in our steel and construction businesses. These projects have progressed in line with expectations and last year delivered around EUR 20 million of our total savings target of EUR 100 million. We currently anticipate achieving the full target and the ensuing improvement in earnings performance is expected to be reflected in full by the third quarter of the current year onwards. On top of the efficiency projects, we have also focused on those businesses where we believe we are able to build a competitive edge and also future profitable growth in the long term. The Fortaco arrangement means our business structure is more focused than earlier. Towards the end of last year, we agreed with funds managed by CapMan to combine units of Komas and units of Ruukki Engineering to form a new company, Fortaco. In future, our own strategy will focus on construction and developing the special steels business, where we will be pursuing profitability and selected growth. We must improve our competitive position in all our chosen business areas as we aim for market leadership or second position in chosen products. This also requires better management of the value chain, improved distribution and service, direct contact with end customers and a focus on fewer products. Residential roofing products, the Nordic and Polish markets and Russia, which offers growth potential in many product groups, have a key role in our construction strategy. There is also growing demand in many of our market areas for new energy-efficient construction products and solutions, which either save energy or utilise renewable energy. This is especially so in the Nordic countries, where we aim to strengthen our good market position and to specialise through services and innovations. Last year we launched numerous energy-saving and recyclable construction products, such as Ruukki energy panels for commercial and industrial construction. In addition, we also rolled out products and solutions - such as solar panels and ground-source heat solutions for foundations - that utilise renewable energy. Construction activity is expected to either remain at the same level as in 2012 or to show a slight decline in all our main market areas, with the positive exception of Russia, where commercial and industrial construction, an important sector for us, is expected to grow compared to the previous year. Our focus on our own distribution channel for residential roofing products was reflected in these products outperforming market growth in 2012 and there is good potential for this to continue also during the current year. In the steel business, the emerging markets are the growth drivers. The "new normal" in Europe is reflected as about twenty million tonnes of steel overcapacity and steel prices following great fluctuations in the global price development of raw materials. In the steel business, our focus areas are on increasing the share of special steel products and developing our distribution and partnership network in the emerging markets, including Russia, Asia and South America. It is still important for us to continue to improve cost efficiency in all our operations. The sharp fall in the prices of main raw materials in the steel business resulted in steel end-customers and steel wholesalers destocking. This was reflected in a clear decline in demand for steel, especially during the second half of 2012. A sharp rise in the market price of iron ore during January 2013 was visible in order activity picking up and a rise in the prices of steel products. In our steel business, we expect service centre sales to remain at a good level during 2013. However, general economic development gives rise to much uncertainty as regards demand from mill customers. The global economic outlook continues to be uncertain and we cannot expect any significant help from a pick-up in the market. However, my expectations for 2013 are cautiously positive and I believe our actions to improve efficiency and the business choices we have made will pave the way for a clear improvement in profitability. Comparable nets 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. Rautaruukki Corporation's full financial statement bulletin for 2012 is attached to this bulletin. For further information, please contact: Sakari Tamminen, President & CEO, tel. +358 20 592 9075 Markku Honkasalo, CFO, tel. +358 20 592 8840 News conference for analysts and the media A joint news conference in English both for analysts and the media will be hosted on Friday 15 February at 10.30 am at Ruukki's head office, Suolakivenkatu 1, 00810 Helsinki. A live webcast of the event and the presentation by the company's President & CEO Sakari Tamminen may be followed online on the company website at www.ruukki.com/Investors starting at 10.30 am EET. This event can also be attended through a conference call by dialling the number below 5-10 minutes before the scheduled time: +44 207 1620 177 (calls outside Finland), +358 9 2313 9202 (calls inside Finland) Access code: 927935 A replay of the webcast can be viewed on the company's website from approximately 4pm EET. A replay of the conference call will be available until 23 February 2013 at: +44 20 7031 4064 (calls outside Finland), +358 9 2314 4681 (calls inside Finland) Access code: 927935 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 EUR 2.8 billion. The company's share is quoted on NASDAQ OMX Helsinki (Rautaruukki Oyj: RTRKS). DISTRIBUTION: NASDAQ OMX Helsinki Main media www.ruukki.com Rautaruukki Financial statement bulletin 2012: http://hugin.info/3013/R/1678547/547897.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Rautaruukki Oyj via Thomson Reuters ONE [HUG#1678547]