Steel manufacturer Rautaruukki sees fivefold increase in profits in first quarter of 2004

Higher steel prices boost January-March profits to EUR 63 million

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The metal products concern Rautaruukki reported a first-quarter result on Monday that clearly exceeded expectations. The concern’s pre-tax profits were five times higher than at the same time last year, growing from EUR 12 million in January-March 2003 to EUR 63 million for the same period this year.
      The steel manufacturer’s turnover in the first quarter was EUR 795 million, which is EUR 91 million more than at the same time last year.
      Most of the improved result is attributable to the rise in steel prices around the world. In Rautaruukki’s core market in Europe, demand for steel and other metal products increased only slightly.
     
"There is very high demand in China, which is also reflected in Europe. As a result, the prices of raw materials have gone up", says Mikko Hietanen, head of finance at Rautaruukki.
      Rautaruukki buys almost all of its raw materials from subcontractors, with the exception of some recycled materials.
      Rautaruukki does not sell goods to China, but because of the China boom, many of its competitors have reduced their supply of steel to Europe, giving the company a chance to improve its position.
      "When the situation is so overheated, the prices of raw materials have risen more", Hietanen says.
      He is concerned that the increase in prices of raw materials could threaten to weaken the company’s result in April - June.
      "The goal is to fully compensate for the higher costs through higher prices."
      The company expects its turnover for 2004 to reach EUR 3.1 billion.
      "As demand increases, the profit development will continue to be positive", Hietanen says.
     
In the European Union Rautaruukki has benefited from an increase in construction. Growth in Rautaruukki’s key market areas - the Nordic Countries, the Baltic States, and the "the countries of the new Central Europe" - was somewhat better than in the EU countries on the average.
      Because of the better-than-expected figures, the company decided to publish its results two days in advance.
      On Monday, Rautaruukki shares rose by nearly three percent on the Helsinki Stock Exchange.


Links:
  Rautaruukki web site: Interim report January-March 2004

Helsingin Sanomat