On July 17, Finnish steelmaker Rautaruukki (Ruukki) announced its interim report for the first half of 2009.
As per its report, Ruukki registered an operating loss of €230 million in the first half of 2009, compared to the operating profit of €309 million in the first half of 2008, while the company reported an operating loss excluding non-recurring items of €225 million in the period in question compared to the operating profit excluding non-recurring items of €314 million in the same period of the previous year.
In the first half of 2009, Ruukki's consolidated net sales decreased to €944 million from €2 billion in the year-ago period.
Commenting on the depressing results, Ruukki's president and CEO Sakari Tamminen said, "Exceptionally weak market conditions in countries where Ruukki operates continued into the second quarter and it is still difficult to predict market development. In many of our customer industries, destocking has taken longer than expected. This in turn has led to lower delivery volumes than we expected for the second quarter. Within construction, demand was especially slow in commercial and industrial construction."
"Weak earnings performance was mainly attributable to lower sales volumes and the low steel production capacity utilization rate. The low capacity utilization rate in steel production had a negative cost impact of around €160 million. Profitability was additionally burdened by lower selling prices. We started up the idle blast furnace at the Raahe Works in May, but this still did not yet significantly reduce the cost per unit of steel produced during the second quarter," Mr. Tammiren added.
According to Ruukki, there are signs that the market will pick up towards the end of the year in some of its customer segments as a result of falling stock levels.
Based on efficiency improvement actions and adjustment measures under way, lower costs of raw materials used in steel production and improved cost efficiency in steel production, Ruukki estimates there will be a marked improvement in the result before taxes for the second half of the year compared to the first half, though it might remain slightly negative.