UPDATE 1-Austria's RHI cuts investment, keeps outlook

Fri Mar 8, 2013 2:13am EST

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* Sticks to 2013 outlook for flat sales, higher EBIT margin

* Dividend stable at 0.75 euros per share

* To cut plant capacity, reduce investment to 75 mln euros

VIENNA, March 8 (Reuters) - Austrian fireproof materials maker RHI stuck to its 2013 outlook on Friday but said it would cut investment and production capacity due to lower growth in Europe.

RHI reiterated it expected stable revenues this year after a 4 percent decline in 2012 and a higher operating profit margin thanks to cost cuts and lower raw materials costs as it produced more of these in house. It kept its dividend stable.

The company said it planned investments of about 75 million euros ($98 million) this year, down from 168 million in 2012, a quarter of which would be used for environmental investments.

"The expected lower growth rates in Europe require an adjustment of capacities in order to ensure optimal utilisation of the production plants. There, a plant concept is currently being evaluated in the RHI group."

RHI, which makes products designed to resist heat and stress in high-temperature industrial processes, generates about 60 percent of its sales from the steel sector, which is in decline in Europe due to low industrial demand and high energy prices.

Fourth-quarter earnings before interest and tax (EBIT) fell 22 percent to 33 million euros, below the 35 million average estimate in a Reuters poll of six analysts. Sales fell 3 percent to 463 million euros, better than the 446 million poll forecast.

($1 = 0.7644 euros) (Reporting by Georgina Prodhan; Editing by Mark Potter)

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