EANS-News: RHI AG / Results of the third quarter 2016

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9-month report

In the first nine months of 2016, the RHI Group's revenue dropped by
6.5% compared with the same period of 2015 and amounted to EUR
1,227.3 million. In the Steel Division revenue declined by 4.6% due
to a weaker business development in South America, Europe and China
and the opening of the product portfolio to lower-performance
products. These products support the sales volume and margin
development, but lead to lower revenue due to the lower price level.
In the Industrial Division the decrease in revenue of 11.3% compared
with the same period of 2015 is among other things due to lower
deliveries in the cement/lime and environment, energy, chemicals
business units.

Despite the decline in revenue, the operating EBIT rose by 7.2% from
EUR 91.4 million in the first nine months of 2015 to EUR 98.0 million
in the current financial year. This development is primarily
attributable to a positive earnings situation in the Steel Division
due to favorable product mix effects and better utilization of the
production capacities resulting from the increase in sales volume. In
addition, the operating EBIT of the Raw Materials Division improved
due to good capacity utilization at the Austrian raw material plants,
which predominantly produce basic mixes for the steel industry,
especially for the use in electric arc furnaces. Overhead cost
savings also supported the earnings development. In contrast, the
Industrial Division's operating EBIT was lower than in the previous
year due to a decline in revenue. The RHI Group's operating EBIT
margin increased from 7.0% in the first nine months of 2015 to 8.0%
in the current financial year.

EBIT amounted to EUR 101.1 million in the first nine months of 2016
and includes negative effects on earnings of EUR 4.6 million from the
deconsolidation of the US subsidiary RHI Monofrax, LLC following the
sale to the German private equity fund Callista, and EUR 3.6 million
related to the social plan for staff layoffs and changes in the
production portfolio at the site in Porsgrunn, Norway. In contrast, a
positive effect of EUR 11.3 million resulted from the measurement of
the power supply contract in Norway.

Free cash flow amounted to EUR 75.5 million in the first nine months
of 2016, after EUR 74.8 million in the comparative period of 2015.
Net debt declined from EUR 397.9 million at the end of the financial
year 2015 to EUR 364.0 million at September 30, 2016. The number of
employees decreased from 7,898 at the end of the year 2015 to 7,568.

Q3/2016 In the third quarter of 2016, revenue dropped by 9.9% to EUR
397.1 million compared with the strong second quarter of 2016. This
is attributable to seasonally weaker business in Europe during the
summer months and a weaker business development in the Middle East in
the Steel Division as well as a decrease in project deliveries in the
environment, energy, chemicals, and nonferrous metals business units.

As a result of declining revenue, the operating EBIT dropped from EUR
39.9 million in the second quarter of 2016 to EUR 27.8 million in the
past quarter. In addition, external expenses of EUR 3.7 million
related to the planned combination of RHI and Magnesita incurred in
the third quarter of 2016 had a negative impact on the earnings
development. These expenses totaled EUR 3.9 million in the first nine
months of 2016.

EBIT amounted to EUR 32.5 million in the third quarter of 2016 and
includes costs of EUR 3.6 million for the social plan and the changes
in the production portfolio as well as positive net effects from the
power supply contract in Norway. Based on own use, the sale at market
prices and an increase in electricity future prices, financial
liabilities of EUR 8.3 million were reversed. Income tax expenses in
the past quarter were positively influenced by the reversal of a
provision of EUR 6.3 million related to a tax audit in Turkey.

Outlook For the full year 2016, the Management Board of the RHI Group
expects revenue below the level of the past financial year if the
macroeconomic environment and exchange rates remain stable. The
operating EBIT margin is expected to reach roughly 8%, adjusted for
external expenses related to the planned combination of RHI and
Magnesita, which corresponds to an increase by roughly one percentage
point compared with the previous year.

Should the current evaluation regarding the optimization of the plant
structure provide first decision-relevant results in the fourth
quarter of 2016, this may lead to non-cash impairment losses of a
maximum of EUR 10 million. The planned continuation of the reduction
of working capital and different cost measures in the sales and
general administrative departments should support the generation of
free cash flow and lead to a further reduction of net debt.

in EUR million 9M/16 9M/15 Delta 3Q/16 2Q/16 Delta
Revenue 1,227.3 1,312.5 (6.5)% 397.1 440.5 (9.9)%
EBITDA 148.7 142.3 4.5% 48.1 57.4 (16.2)%
EBITDA margin 12.1% 10.8% 1.3pp 12.1% 13.0% (0.9)pp
Operating EBIT 1) 98.0 91.4 7.2% 27.8 39.9 (30.3)%
Operating EBIT margin 8.0% 7.0% 1.0pp 7.0% 9.1% (2.1)pp
EBIT 101.1 91.4 10.6% 32.5 41.5 (21.7)%
EBIT margin 8.2% 7.0% 1.2pp 8.2% 9.4% (1.2)pp
Profit before income tax 92.0 82.1 12.1% 29.1 39.1 (25.6)%
Profit after income tax 64.0 56.0 14.3% 25.1 24.1 4.1%

1) EBIT before expenses from derivatives from supply contracts, impairment and
restructuring effects

The report for the third quarter of 2016 is available for download on 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

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