RHI AG. May 12, 2016

Transcription

1 RHI AG Results 1Q/16 May 12, 2016

2 Highlights & Lowlights Highlights Positiv Steel Division operating EBIT margin of 7.8% in 1Q/16 driven by Europe and North America as a result of an improved product mix (e.g. more EAF business) despite a weak revenue level Raw Materials Division operating EBIT turned positive again on the back of improved capacity utilization Working Capital continuing downward trend with fourth consecutive quarterly decrease Free Cash Flow free cash flow generation of 22.1m in 1Q/16 Net Debt net debt down further 19.0m to 378.9m Lowlights Negativ Sales Volumes down 4.7% in Steel Division compared to 1Q/15 driven by lower steel production and less deliveries in South America and the Middle East down 5.9% in Industrial Division driven by a decrease in deliveries in the cement/lime and environment, energy, chemicals (EEC) business Industrial Division low revenue level of 123.6m weaker demand in cement/lime business unit resulting of delivery postponements by customers in the EEC business unit a major contract in India was delivered in the coal and petroleum coke sector in the previous year operating EBIT margin of 7.1% driven by lower revenue and the resulting weaker utilization of production capacities Energy Supply Contract in Norway mark-to-market k t valuation leads to a negative P&L impact due to further falling energy prices 2

3 Market Environment Steel Steel global crude steel production down 3.4% vs. 1Q/15 and flat vs. 4Q/15 -) global crude steel production declined in all regions worldwide with the exception of India -) despite a gradual economic recovery in Europe, steel production dropped sharply in the European Union (primarily due to the decline of roughly 39% in the UK resulting from the closure of a steel plant) -) in China, weak demand by the construction industry and the metalworking industry led to a decrease by 2.7% World Steel Association revised its growth expectations for global steel demand downwards -) estimates for the advanced economies remained largely stable at 1.7%, whereas the development of steel demand in the emerging markets is expected to be significantly weaker at (1.7)% after forecast growth of 0.2% in October ) the environment of the steel industry is still considered to be challenging due to the effects of the economic deceleration in China. A quick recovery of the steel sector in China is not expected (decline by 4.0% 2016 and by 3.0% in 2017) -) for steel demand d outside China a growth rate of 1.8% is expected (whereas especially South America, at (6.0)%, and the CIS region at (7.4)% should remain weak and North America, at 3.2%, and Europe at 1.4% should show solid growth) in million tons 1Q/16 4Q/15 3Q/15 2Q/15 1Q/15 y/y q/q China (2.7)% (1.1)% World ex China (4.1)% 1.3% thereof EU (7.0)% 5.7% thereof US (1.5)% 7.1% thereof India % 4.6% World (3.4)% 0.1% 3

4 Development of Steel Prices and Input Costs Hot rolled coil in local currency China 7% US ()% EU 4% Iron ore in USD/ton (23)% Coking coal in USD/ton (14)% 110% CN 110% 110% 100% EU 100% 100% 90% 90% 90% 80% US 80% 80% 70% 70% 70% 60% 50% 60% 50% 60% 50% 12/14 06/15 12/15 12/14 06/15 12/15 12/14 06/15 12/15 Chinese steel exports in million tons polated 1 4/'16 extra Source: Bloomberg 4

5 Market Environment Industrial 5 Cement 120% weak economic situation and regional excess capacities 100% cause lower repair activities 80% in China the downturn of the construction industry and 60% declining property prices are burdening local producers 40% capacities are currently only expanded in North America Nonferrous metal prices marked new multi-year lows at the beginning of 2016 as a result of the market turbulence caused by the concerns regarding economic growth of China however, they recovered slightly as the quarter progressed Glass market environment still characterized by low level of investment activities, excess capacities and ongoing market consolidation (esp. in the US and Europe) 120% 100% 80% 60% 12/14 06/15 12/15 40% 12/14 06/15 12/15 120% 100% 80% Ordinary Portland Cement (China) Lead Aluminium Zinc Copper Nickel Environment, Energy, Chemicals Crude Oil (WTI) permanently low oil price causes a challenging market 60% Natural Gas (NYMEX) environment in the oil and gas conveying industry 40% 12/14 06/15 12/15 Source: Bloomberg

6 Steel Revenue Steel in million Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Europe: revenue up vs. 4Q/15 driven by EAF and ladle business Asia/Pacific: revenue almost flat vs. 4Q/15; substantial decrease in China; expansion in nearly all other markets North America: revenue up on the back of a strong flow control business Africa/CIS/Middle East: revenue down in Russia; compensated in other markets 0 Europe Asia / North Africa / CIS / South Total Pacific America Middle East America segment South America: lower deliveries mainly in linings 6

7 Industrial Revenue Industrial in million Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Cement: revenue decline of 28% due to strongly project- driven 4Q/15 (materials for new plants in North America) Nonferrous: lower deliveries in important copper & nickel segment (roughly 50% of revenue) Cement / Nonf errous Glass Energy / Total Lime metals Chemicals Glass: two large projects in China and the Middle East were postponed by customers Energy/Chemicals: seasonally weaker business in Canada and lower project deliveries in the Middle East 7

8 Group Revenue Group in million Q/15 2Q/15 3Q/15 4Q/15 1Q/ Steel Industrial Raw Total Materials 8

9 Operating EBIT Group in million Q/15 2Q/15 3Q/15 4Q/15 1Q/16 Steel: strong increase in operating EBIT driven by a positive development in Europe and North America as a result of an improved product mix Industrial: unsatisfying operating EBIT resulting from low revenue level and weak utilization of production capacities (e.g. tunnel kilns for burned products) 10 Raw Materials: increase in 5 operating EBIT on the back of a good utilization level (e.g. 0 Austrian raw material plants Steel Industrial Raw Total -5 Materials producing basic mixes for EAF -10 business) 9

10 Financials million 1Q/16 4Q/15 3Q/15 2Q/15 1Q/15 y/y q/q Revenue (8.1)% (11.4)% Gross Profit (7.0)% 6.0% Gross Margin % 22.2%.5% 21.5% 21.0% 21.9% 0.3pp 3.7pp Selling, G&A Expenses (55.3) (54.9) (55.6) (62.9) (61.0) 9.3% (0.7)% Other Income / Expenses (0.9) 6.0 (9.9) (3.5) 2.5 (136.0)% (115.0)% Operating EBIT (12.2)% (7.3)% Operating EBIT % 7.8% 7.4% 5.6% 7.1% 8.1% (0.3)pp 0.4pp Restructuring costs (3.2) (86.6) n.a. 96.3% EBIT 27.1 (53.9) (21.4)% 150.3% EBIT % 7.0% (12.3)% 5.6% 7.1% 8.1% (1.1)pp 19.3pp Net finance costs (6.0) (3.3) (5.8) (3.4) (6.8) 11.8% (81.8)% Share of profit of joint ventures % 8.0% Income taxes (9.0) 16.3 (7.7) 7) (9.6) (8.8) 8) (2.3)% (155.2)% Income taxes % 37.8% 29.8% 40.3% 29.0% 29.4% 8.4pp 8.0pp Profit (from continued operations) 14.8 (38.4) (29.9)% 138.5% EPS 0.36 (0.98)

11 EBIT Bridge 34.5m m m 8.1% 7.8% 7.0% Op. EBIT 1Q/15 Gross profit SG&A expenses Other Inc./Exp. Op. EBIT 1Q/16 Energy contract EBIT 1Q/16 11

12 Long-term energy contract Norway Nordpool Spot (NO2/Kristiansand) 100/MWh 90/MWh 80/MWh 70/MWh 60/MWh 50/MWh contract price 40/MWh 30/MWh 20/MWh futures as of 12/31/15 futures as of 03/31/16 10/MWh 0/MWh 12/05 12/07 12/09 12/11 12/13 12/15 12/17 12/19 12/21 12/23 further decline in Nordpool futures (vs. year end 2015) caused a negative non-cash effect on earnings of roughly 5.1m which had to be recognized from mark-to-market valuation due to own use and the sale at market prices roughly 1.9m of financial liabilities were reversed through profit and loss total t P&L impact of 3.2m is reported below the operating EBIT line in the position losses from derivatives from supply contracts 12

13 Margin Development million 1Q/16 4Q/15 3Q/15 2Q/15 1Q/15 y/y q/q Steel Revenue (8.5)% (07)% (0.7)% Operating EBIT (12.7)% 46.3% Margin 7.8% 5.3% 4.0% 5.8% 8.2% (0.4)pp 2.5pp Industrial Revenue (9.6)% (27.8)% Operating EBIT (33.3)% (63.8)% Margin 7.1% 14.2% 6.8% 10.6% 9.6% (2.5)pp (7.1)pp Raw Materials Revenue (5.3)% 14.8% thereof external % (7.3)% thereof internal (9.8)% 19.6% Operating EBIT 1.6 (5.2) 3.0 (1.5) (1.5) 206.7% 130.8% Margin* 2.3% (8.5)% 4.6% (2.1)% (2.0)% 4.3pp 10.8pp Group Revenue (8.1)% (11.4)% Operating EBIT (12.2)% 2)% (73)% (7.3)% Margin 7.8% 7.4% 5.6% 7.1% 8.1% (0.3)pp 0.4pp 13 * Margin on the basis of total internal and external revenues

14 Working Capital (16)m (103)m 620m 533m 516m (26) 10 1 (45) (64) 5 516m Inventories Receivables Receivables Inventories Payables Receivables Inventories Payables (177) (177) Payables (2) (177) 4Q/15 1Q/16 1Q/15 1Q/16 working capital down vs. year end 2015 driven by lower receivables as a consequence of lower revenue increase in inventories mainly caused by delivery postponements in the Industrial Division working capital significantly lower year-over-year driven by strong inventory reduction especially in the Steel and Raw Materials Division decrease in receivables mainly due to improvements in Steel Division 14

15 Cash Flow Bridge m m 14.3 Free cashflow of 22.1m Cash at year end 1Q/16 CF from op. Working CF from Net Interest Currency activities excl. capital investing loans payments translation working capital activities Cash at period end 1Q/15 15

16 ROCE - Trailing Twelve Months 1Q/16 1Q/15 Revenues 1Q/16 1Q/15 ROCE 1Q/16 1Q/15 NOPAT Q/16 1Q/15 Operating EBIT Taxes (10.0) (32.1) 1,7.1 1, Cost of sales (1,361.2) (1,371.7) + SG&A (228.7) (233.4) + Other Inc./Exp. (8.3) % 8.5% Fixed assets Capital employed 1, , Intangible assets Working capital Inventories Receivables Payables

17 Outlook Outlook FY 2016 RHI expects revenue below and an operating EBIT at the level of the past financial year, with the first half of 2016 slightly weaker than the second half of the year. The expected decline in revenue in the Steel Division is related especially to an expected slowdown of the business development in South America and a highly competitive environment. In the Industrial Division, weaker nonferrous metals and cement/lime business could cause a decrease in revenue. Due to the development in the customer industries, RHI is currently working on further optimizing the plant structure, which could lead to an adjustment of production capacities in Europe in the current financial year. In addition, different cost measures have been defined in the sales and general administrative departments. The planned continuation of the reduction of working capital should support the generation of free cash flow and lead to a further reduction of net debt. 17

18 RHI AG, Investor Relations Simon Kuchelbacher, CIIA Wienerbergstrasse 9, 1100 Vienna, Austria Phone: +43 (0) , Important notice: This document contains forward-looking statements based on the currently held beliefs and assumptions of the management of RHI AG ( RHI ), which are expressed in good faith and, in their opinion, reasonable. These statements may be identified by words such as expectation or target and similar expressions, or by their context. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of RHI to differ materially from the results, financial condition, performance or achievements express or implied by such forward-looking statements. Given these risks, uncertainties and other factors, recipients of this document are cautioned not to place undue reliance on these forward-looking statements. RHI disclaims any obligation to update these forwardlooking statements to reflect future events or developments. This document may use terms which are non-ifrs financial measures. These supplemental financial measures should not be viewed in isolation as alternatives ti to measures of RHI s financial i condition, results of operations or cash flows as presented in accordance with IFRS in RHI s consolidated d financial statements. For definition of these supplemental financial measures, a reconciliation to the most directly comparable IFRS financial measures and information regarding the usefulness and limitations of these supplemental financial measures please contact the RHI Investor Relations team ([email protected]). No information contained in this document constitutes or shall be deemed to constitute a basis for investment decisions or an invitation to invest or otherwise deal in shares of RHI. Additionally, the Disclaimer/Terms of use of the RHI group s websites shall be applied.