RHI Magnesita

Results of the first half of 2016

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6-month report

Revenue of the RHI Group was down 8.0% on the comparative period of 2015 and
amounted to EUR 830.2 million in the first half of 2016. In the Steel Division,
revenue decreased by 5.6% especially due to a weaker business development in
South America, Europe and China. In the Industrial Division, the decline in
revenue by 14.4% compared with the first half of 2015 is among other things
attributable to lower deliveries in the cement/lime, glass and environment,
energy, chemicals business units.
The operating EBIT amounted to EUR 70.2 million in the first half of the year.
Compared with the first half of 2015, at EUR 68.6 million, this is an increase
by 2.3% despite the decrease in revenue. This development is primarily due to a
highly satisfactory earnings situation in the Steel Division based on positive
product mix effects, better utilization of the production capacities resulting
from the increase in sales volume as well as savings in overhead costs.
Moreover, the operating EBIT of the Raw Materials Division improved
significantly as a result of good capacity utilization at the two Austrian raw
material plants, Breitenau and Hochfilzen, which predominantly produce basic
mixes for the steel industry, especially for the use in electric arc furnaces,
and lower production costs at the plant in Porsgrunn, Norway. In contrast, the
operating EBIT of the Industrial Division was lower than in the previous year
due to a decline in revenue. The RHI Group's operating EBIT margin rose from
7.6% in the first half of 2015 to 8.5% in the first half of 2016.
EBIT amounted to EUR 68.8 million in the first half of this year and includes a
negative earnings effect of EUR 4.6 million from the deconsolidation of the US
subsidiary RHI Monofrax, LLC resulting from the sale to the German private
equity fund Callista. On the other hand, it also includes a positive net effect
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
roughly EUR 3.0 million were reversed and recognized through profit or loss.
In the second quarter of 2016, the RHI Group's revenue rose to EUR 440.5
million, up 13.0% on the previous quarter. This increase is primarily
attributable to significantly higher contributions to revenue from the Steel
Division, especially in Europe, Africa and the CIS region, and from the
environment, energy, chemicals and nonferrous metals business units.
The operating EBIT rose from EUR 30.3 million in the first quarter of 2016 to
EUR 39.9 million in the past quarter, which was among other things due to better
utilization of the production capacities resulting from the increase in sales
volume. In addition, the operating EBIT of the second quarter of 2016 is
influenced by positive currency effects resulting from the devaluation of the
euro. The operating EBIT margin of the RHI Group thus improved from 7.8% in the
first quarter of 2016 to 9.1% in the past quarter.
Working capital decreased for the fifth consecutive quarter and amounted to EUR
495.1 million at June 30, 2016 after EUR 532.6 million at the end of the year
2015. The decline by EUR 37.5 million is attributable to both lower inventories
and lower trade receivables.
Net cash flow from operating activities amounted to EUR 76.7 million in the
first half of 2016 after EUR 64.9 million in the same period of 2015. After the
deduction of cash flow from investing activities of
EUR (17.1) million in the first half of the year, free cash flow amounted to EUR
59.6 million after EUR 62.8 million in the first half of 2015. Net debt declined
from EUR 397.9 million at the end of the year 2015 to EUR 373.9 million at June
30, 2016 despite the dividend payment of EUR 29.9 million.
Despite the challenging market environment, the Management Board of RHI AG is
increasing the outlook due to the positive earnings development in the first
half of the year. Consequently, an operating EBIT margin of roughly 8% is
expected for the full year 2016, which corresponds to an increase by roughly one
percentage point compared with the previous year.
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.

in EUR million           1H/16 1H/15 Delta     2Q/16 1Q/16 Delta
Revenue                  830.2 902.0 (8.0)%    440.5 389.7 13.0%
EBITDA                   100.6 102.5 (1.9)%    57.4  43.2  32.9%
EBITDA margin            12.1% 11.4% 0.7pp     13.0% 11.1% 1.9pp
Operating EBIT 1)        70.2  68.6  2.3%      39.9  30.3  31.7%
Operating EBIT margin    8.5%  7.6%  0.9pp     9.1%  7.8%  1.3pp
EBIT                     68.6  68.6  0.0%      41.5  27.1  53.1%
EBIT margin              8.3%  7.6%  0.7pp     9.4%  7.0%  2.4pp
Profit before income tax 62.9  63.0  (0.2)%    39.1  23.8  64.3%
Profit after income tax  38.9  44.6  (12.8)%   24.1  14.8  62.8%                

1) EBIT before expenses from derivatives from supply contracts, impairment and
restructuring effects
The report on the first half of 2016 is available for download on the RHI
website: www.rhi-ag.com / Investor Relations / Financial Reports

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

end of announcement                               euro adhoc 

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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