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.


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

"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