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RHI shows increased earnings in its 3Q12 results

World Cement,

The markets

Due to the reduced demand for cement in Europe, many of RHI’s customers have been forced to adjust their costs. Naturally, this has had a knock-on effect on the refractory industry, and with demand for cheaper refractory materials rising steeply, RHI has launched a new product line to reflect this development.

China, another key market for RHI is also suffering from a slowing economy and the resulting decline in capacity utilisation. RHI has been able to maintain its presence given the edge that product-quality gives it over local competitors.

Beyond these two markets, developments in the cement market have been positive, and RHI has enjoyed being part of this market growth, especially in the CIS countries.

The US property market is continuing towards recovery, and investments in the construction sector are beginning to show signs of improvement. The climate is becoming friendlier towards cement, and RHI has felt the change, with demand for its products starting to pick up again. South of the border, Latin America is proving to be an interesting growth market for the company for both third-party and project business. Its activities in brazil though have bee significantly impacted by a 20% increase in import duties for fired basic refractory materials.

The results

The RHI Group increased its revenues by 7.0% in 3Q12 as compared to the same quarter of 2011, with total revenues amounting to €459.9 million. While revenues in the company’s steel division dropped by 3.7%, its industrial division recorded growth of 25.8% as some major projects were delivered. The operating result of the third quarter was also up 28.3% on the same period last year and amounted to €50.3 million.

Positive Restructuring brought in €6.3 million from the sale of the company’s manufacturing plant in South Africa, and the Group’s EBIT amounted to €56.6 million for 3Q12, exceeding the figure of the third quarter of 2011 by a staggering 44.4%. The EBIT margin improved significantly from 9.1% to 12.3%.

Although revenues were 3.4% lower than in the second quarter, RHI increased its operating result by 3.3% in the third quarter. While the operating result margin rose from 10.2% in 2Q12 to 10.9% in the third quarter, the increase in the group EBIT margin from 9.3% to 12.3% was more significant due to the expenses resulting from the previous quarter’s restructuring and positive effects from the sale of the plant in South Africa. 

Written by Jack Davidson.

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