UPDATE 1-RHI's Q1 revenues drop on weak steel, construction

Wed May 14, 2014 3:12am EDT

Related Topics

* Sales drop 12 pct q/q to 402 mln eur

* Fire curtails Norway plant operations until mid-June

* Shares flat at 25.00 euros (Adds quarter-on quarter comparisons, details on Norway, shares)

VIENNA, May 14 (Reuters) - Austrian fireproof materials maker RHI posted a steep quarter-on-quarter drop in sales as political tensions depressed output from its key steelmaker customers while a weak market environment for new construction hurt its industrial division.

RHI, which builds furnaces for the steel industry, the source of two-thirds of its revenues, said first-quarter sales dropped 12 percent from the fourth quarter, with steel division sales down 8 percent and industrial down 22 percent.

The company said on Wednesday tough markets in South America, political tensions in Ukraine and Turkey and the Chinese New Year had hurt its steel unit results, while its industrial unit saw lower demand from glass and cement makers.

The sales result of 402 million euros ($551 million) was well below the average estimate of 424 million euros in a Reuters poll of analysts.

RHI said it expected significantly higher revenues this quarter as it had strong incoming orders, and said its quarterly operating margin should rise to roughly 9 percent from 8.5 percent. It reiterated its full-year outlook.

Profits rose quarter-on-quarter thanks to the absence of one-offs that had included charges for a problem-hit magnesia-fusion plant in Norway, and were slightly below expectations.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 16 percent to 50 million euros, EBIT was 34 million euros after a loss of 53 million last quarter, and the company swung to a net profit of 20 million euros.

RHI said improvements it had made at its Norwegian plant, designed to wean it off raw-materials dependence on Chinese suppliers, were showing first signs of success.

But it said a power failure in the industrial park where it is situated had caused a fire at the plant in early May and that it was assessing the damage, which would put some furnaces out of action until mid-June.

($1 = 0.7296 Euros) (Reporting by Georgina Prodhan; Editing by Mark Potter and Michael Shields)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.