Finland-based steelmaker Ruukki has issued its financial results for the first quarter of the current year, stating that it expects demand for steel to pick up slightly in 2014. Nevertheless, demand growth will continue to be limited by overcapacity in the steel markets and slowing economic growth in emerging countries. Ruukki expects demand for special steels to outpace demand for standard products, especially in market areas outside Europe.
The company reported an operating profit of €5 million in the first quarter, 25 percent higher than the same quarter of the previous year. Despite a good capacity utilization rate and the positive development seen in relative share of special steels, clearly lower average selling prices drove operating profit below the level of a year earlier. Net sales revenues in the given quarter amounted to €581 million, decreasing by 1.35 percent year on year. The company's order intake decreased by 5.8 percent to €560 million in the given period, compared to the first quarter of 2013.
During the first quarter this year, Ruukki Metals' order intake and net sales were at the same level as a year earlier. Higher order and delivery volumes of special steel products in particular offset the negative impact of lower average selling prices compared to a year earlier. An especially positive note in the first quarter was that net sales of special steels were up 16 percent year on year and five percent quarter on quarter. A weakening of certain currencies in emerging markets outside Europe impacted negatively on the order intake value of special steels.
According to Ruukki, the Ukraine crisis and its multiplier effects on economic growth in Russia have not yet been significantly reflected in Ruukki's everyday business in either Ukraine or Russia. Nevertheless, the impacts of the crisis on exchange rates resulted in a non-cash calculated exchange rate loss of around €8 million in Ruukki's finance costs during the report period. The unstable situation in Ukraine increased uncertainty in growth potential not just in Russia, but also in Finland and across the whole of Europe, and it is still impossible to assess the ultimate effects of the situation.