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UPDATE 1-Finnish steelmaker Rautaruukki warns of bigger loss
October 23, 2012 / 8:26 AM / 5 years ago

UPDATE 1-Finnish steelmaker Rautaruukki warns of bigger loss

* Q3 op loss 18 mln euros vs forecast 6.4 mln loss in poll

* Sees H2 operating loss bigger than in H1

* Shares fall 3.6 pct (Rewrites lead, adds unit results, shares, CEO comment)

HELSINKI, Oct 23 (Reuters) - Finnish steelmaker Rautaruukki warned of a bigger second-half operating loss on Tuesday, cutting its forecast for the second time in four weeks under pressure from lower prices and a weakening global economy.

The company’s shares fell 3.6 percent after it reported a larger-than-expected third-quarter loss.

Steelmakers across the world are suffering from overcapacity, weak demand in austerity-ravaged European markets and slower growth in China.

The world’s fourth-biggest steelmaker POSCO said on Tuesday it expected fourth-quarter earnings to fall from the third quarter, adding a sharp recovery in the global steel market was unlikely next year.

Only last month, Rautaruukki said it expected a second-half loss around the same level as the 8 million euros loss it reported in January-June.

But for the third quarter alone, the underlying operating loss was 18 million euros ($24 million), much worse than the average forecast of 6.4 million euros given by analysts in a Reuters poll.

A year ago the group made a third-quarter profit of 1 million euros.

Chief Executive Sakari Tamminen said customers seemed wary of making investment decisions due to the uncertain economic situation.

Rautaruukki’s steelmaking unit was particularly weak, with its operating loss widening to 18 million euros from a 3-million-euro loss a year earlier. Its construction and engineering units were also weaker than a year ago.

The company warned last month it would make an operating loss this year, and would cut around 250 jobs to reduce costs.

Last week it said it would spin off part of its engineering business as a new company in partnership with Komas, aiming to focus on improving its steel and construction business.

$1=0.7651 euros Reporting by Terhi Kinnunen; Editing by Mark Potter

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