Rautaruukki’s (OMX: RTRKS) comparable net sales grew by 4% and the order intake of 686 million Euros was also marginally higher than last year. These numbers alone certainly aren’t impressive but that operating profit turned negative at -15 million with result before taxes of -26 million was even more alarming. Reported numbers are very close to the comparable figures.
At least the company can note that the net cash flow of 54 million was on the plus side. Ruukki maintains 2012 guidance of 5 per cent revenue growth and improved operating profit. President & CEO Sakari Tamminen noted that uncertainty returned towards the end of the period particularly in China and in Southern Europe.
It should not be a surprise to anyone that Ruukki’s operations in China haven’t been performing well. The company has decided to discontinue cabins and components manufacturing in Shanghai and focuses engineering business in Europe. Steel business presence in China on the other hand will be increased and engineering business premises and machinery will be used for these activities. Ruukki is focusing on special steel strategy with wear-resistant and high-strength products.
Cost cutting measures will involve exiting unprofitable markets in ”Central Eastern Europe” construction. The company has identified 35 million Euros of potential savings in sales and marketing, financial and HR administration etc. support functions. It will now be seeking such savings more rigorously in construction side as well. We will be hearing more about upcoming measures within the next few weeks. The share was trading down for most of the day but surged to a small plus in the final hour of trading.
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