RHI posts good 2014 financials, despite overcapacity
By Siobhan Lismore-Scott
Published: Friday, 27 February 2015
RHI will reduce output on weaker demand with FM and CCM production both facing cuts, while 2014 results are expected to be flat year-on-year
Austrian magnesia and refractories producer RHI AG will
reduce production of fused magnesia (FM) at its Porsgrunn
Norway plant over 2014, due to low market prices for the
grade, it said in its preliminary results statement at the
end of January.
The company will also be shutting production at
its Germany magnesia raw material site and assigning production
to other plants.
The company said that it expects to post 2014
revenues of €1.7bn ($1.9bn*), flat to 2013, with an
operating result "exceeding expectations", coming in at over
$140m. EBIT** is expected to be €110m, down marginally
year-on-year.
RHI also highlighted in its preliminary results
that "significant progress" had been made in the production
process at Porsgrunn, despite the company’s
intention to reduce capacity.
The company said that further optimisation is
still required in upstream production in order to achieve
targeted costs. With this in mind, it is seeking to reduce
caustic calcined magnesia (CCM) output.
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RHI’s CEO, Franz Struzl, has
been at the helm since 2011 and
indicated that he may stay on beyond his original 2016
contract
as the company weathers tough conditions in the global
refractories
market.
RHI
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"Premium-grade qualities for customers in the
steel industry will still be supplied with raw materials from
Norway. These measures secure the continued operation of the
plant and will halve the negative contribution to earnings in
the year 2015," RHI said.
Nevertheless, an asset impairment of roughly
€7m is necessary in the year 2014, it added.
Elsewhere, in the glass segment of its business,
RHI said that it does not expect significant year-on-year
improvements "due to difficult market conditions and worldwide
excess capacities for fused cast products".
With this in mind, the company said raw materials
for applications in the industrial business, which were
previously purchased externally, "will be produced at the
American site starting in the year 2015 in order to improve
capacity utilisation".
*Conversion made February 2015
** Earnings before interest and tax