EANS-News: RHI AG / Results of the third quarter 2015, EBIT affected by the devaluation of the Brazilian real in the amount of EUR 10.4 million

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quarterly report

In the first nine months of the year 2015, the RHI Group's revenue
was up 4.6% on the comparative period of 2014 and amounted to EUR
1,312.5 million. Revenue of the Steel Division rose by 3.3%, mainly
because of positive currency translation effects and a strong
business development in India and South America. The Industrial
Division's increase in revenue by 9.8% compared with the first nine
months of the year 2014 is amongst other things due to higher project
deliveries in the business units glass and environment, energy,
chemicals.

The operating EBIT of the RHI Group amounted to EUR 91.4 million in
the first nine months of the current year. Compared with the
operating EBIT of EUR 100.1 million in the same period of 2014, this
corresponds to a decline by 8.7%. While the Industrial Division
benefited from a better utilization of fixed costs resulting from the
increment in revenue, an improved margin situation of the glass
business unit and several major repairs in the nonferrous metals
business unit, the operating EBIT in the Steel Division decreased due
to a weaker margin development in Europe and in the Middle East as
well as negative product mix effects related to a volume decline in
the electric steel segment. The Raw Materials Division's lower
contribution to earnings is attributable to weaker capacity
utilization at the raw material plants related to the declining
volumes in the electric steel sector. The operating EBIT margin
decreased from 8.0% in the first nine months of the year 2014 to 7.0%
in the current financial year.

Q3/2015 In the third quarter of 2015, revenue of the RHI Group
declined by 14.1% compared with the second quarter of 2015 and
amounted to EUR 410.5 million. This is attributable to seasonally
weaker business activities in Europe during the summer months, a weak
business development in the electric steel segment in the Middle East
in the Steel Division and to lower project deliveries in the business
units environment, energy, chemicals as well as glass.

The operating EBIT amounted to EUR 22.8 million in the past quarter
and declined primarily due to negative exchange rate effects related
to the valuation of balance sheet items in the amount of EUR 10.4
million, which predominantly resulted from the devaluation of the
Brazilian real and are recorded under other expenses. The market
environment of the Steel Division is characterized by an aggressive
export strategy of Chinese producers resulting from weak domestic
demand and high excess capacities. Accordingly, this led to high
pressure on steel prices and thus on manufacturers' profitability and
subsequently also on suppliers. Due to the lower fixed cost structure
compared with integrated steel plants, the Chinese exports have a
negative impact especially on the utilization rates in the electric
steel segment. This caused a negative effect on the development of
sales volume of the Steel Division in this important customer
segment. In the financial year 2014 the Steel Division generated
revenue of roughly EUR 275 million in the electric arc furnace
segment compared with revenue of roughly EUR 110 million in the basic
oxygen converter segment. Important products for the electric steel
industry are hearth construction and gunning mixes. In this segment,
RHI has its own raw materials, which are mined at the Austrian sites
in Breitenau und Hochfilzen. Consequently, the decline in sales
volume additionally resulted in a weak capacity utilization of the
raw material plants.

Despite a significant decrease in trade payables in the third quarter
of 2015, the positive trend of working capital reduction continued.
Net cash flow from operating activities rose to EUR 91.8 million in
the first nine months of the year 2015, after it had amounted to EUR
40.1 million in the comparative period of 2014. Net debt declined
from EUR 466.9 million at the end of 2014 to EUR 445.6 million at
September 30, 2015 due to the positive cash flow development.

Outlook The difficult economic framework conditions in many customer
industries lead to uncertainties regarding the delivery of refractory
products and the completion of customer projects by the end of the
year, thus making it more difficult to plan the refractory business.
Nevertheless, RHI still expects an increase in revenue by more than
3% for the year 2015. Due to negative exchange rate effects related
to the valuation of balance sheet items of EUR 10.4 million in the
third quarter of 2015, reaching an operating EBIT margin of roughly
8% is becoming increasingly challenging.

in EUR million 9M/15 9M/14 Delta 3Q/15 2Q/15 Delta
Revenue 1,312.5 1,254.7 4.6% 410.5 477.9 (14.1)%
EBITDA 142.3 147.6 1) (3.6)% 39.8 51.3 (22.4)%
EBITDA margin 10.8% 11.8% (1.0)pp 9.7% 10.7% (1.0)pp
Operating EBIT 2) 91.4 100.1 (8.7)% 22.8 34.1 (33.1)%
Operating EBIT margin 7.0% 8.0% (1.0)pp 5.6% 7.1% (1.5)pp
EBIT 91.4 97.4 (6.2)% 22.8 34.1 (33.1)%
EBIT margin 7.0% 7.8% (0.8)pp 5.6% 7.1% (1.5)pp
Profit before income tax 82.1 80.7 1.7% 19.1 33.1 (42.3)%
Profit from continuing operations 56.0 51.6 8.5% 11.4 23.5 (51.5)%

1) adjusted for income from the reversal of investment subsidies recognized as
liabilities
2) EBIT before impairment and restructuring expenses and result from Chapter 11
proceedings

The report for the third quarter of 2015 is available for download at the RHI
website: www.rhi-ag.com/ Investor Relations / Financial Reports

Further inquiry note:
RHI AG
Investor Relations
Mag. Simon Kuchelbacher
Tel: +43-1-50213-6676
Email: simon.kuchelbacher@rhi-ag.com

end of announcement euro adhoc
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company: RHI AG
Wienerbergstrasse 9
A-1100 Wien
phone: +43 (0)50213-6676
FAX: +43 (0)50213-6130
mail: rhi@rhi-ag.com
WWW: http://www.rhi-ag.com
sector: Refractories
ISIN: AT0000676903
indexes: ATX Prime, ATX
stockmarkets: official market: Wien
language: English