EANS-Adhoc: RHI AG / Results of the second quarter 2015, outlook adjusted

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Mid Year Results
05.08.2015

In the second quarter of 2015, the RHI Group increased its revenue by
12.7% compared with the first quarter of 2015 to EUR 477.9 million.
This is in particular due to significantly higher revenue in the
Steel Division in Europe and North America as well as in the
environment, energy, chemicals, glass and nonferrous metals business
units.

The operating result, at EUR 34.1 million in the second quarter of
2015, is at the level of the preceding quarter. The market
environment of the Steel Division is characterized by an aggressive
export strategy of Chinese steel producers as a result of a weak
domestic market and high excess capacities. This led to high pressure
on steel prices and consequently the profitability of manufacturers
and further on the supply industries. In combination with negative
product mix effects in the linings business, this resulted in a
weaker contribution to earnings by the Steel Division compared with
the first quarter of 2015. In contrast, the Industrial Division
significantly increased its operating EBIT due to the delivery of
projects. While the operating EBIT of the first quarter of 2015 still
included slightly positive currency translation effects from intra-
group transactions and the measurement of balance sheet items, the
second quarter of 2015 was negatively influenced. The operating EBIT
margin of the RHI Group declined from 8.1% in the first quarter of
2015 to 7.1% in the second quarter.

First half-year In the first half of 2015, the RHI Group's revenue
was up 7.5% on the comparative period of 2014 and amounted to EUR
902.0 million. The Steel Division's revenue rose by 7.3% primarily
because of positive currency translation effects and a strong
business development in India. The 11.2% increase in revenue in the
Industrial Division compared with the weak first half of 2014 is
primarily attributable to higher project deliveries in the glass and
environment, energy, chemicals business units.

The operating EBIT amounted to EUR 68.6 million in the first half of
the year. This corresponds to a decline by 4.5% compared with the
operating EBIT of EUR 71.8 million in the first half of 2014. This
development is primarily attributable to the Raw Materials Division's
low contribution to earnings resulting from weaker capacity
utilization at the raw material plants as well as falling raw
material prices. While the Industrial Division benefited from a
better utilization of fixed costs as a result of higher revenue, a
better margin situation in the glass business unit and several major
repairs in the nonferrous metals business unit, the operating EBIT of
the Steel Division declined in the second quarter of 2015 due to a
weaker margin development in Europe and in the Middle East, as well
as to negative product mix effects. The operating EBIT margin fell
from 8.6% in the first half of 2014 to 7.6% in the first half of
2015. EBIT of the first half of 2015 included no extraordinary
effects and thus corresponded to the operating EBIT.

Net cash flow from operating activities amounted to EUR 64.9 million
in the first half of 2015 after EUR 12.4 million in the comparative
period of 2014. Working capital, which consists of inventories and
trade receivables less trade payables and prepayments received, rose
by EUR 26.8 million compared with the end of the year 2014 and
amounted to EUR 597.7 million at June 30, 2015. This increase was
amongst other things due to currency effects. Compared with the end
of the first quarter of 2015, however, a reduction by EUR 22.0
million was recorded in the past quarter, despite a significant
increase in revenue.

Net cash flow from investing activities amounted to EUR (2.1) million
in the first half of the year and includes payments related to the
sale of securities due to surplus coverage of the legally required
provisions for pensions of two companies as well as payments from the
sale of a 2.6% share in a German residential property company
totaling EUR 13.9 million. Free cash flow thus amounted to EUR 62.8
million in the first half of 2015 after EUR 3.0 million in the
comparative period of 2014.

Cash and cash equivalents decreased from EUR 151.1 million at
December 31, 2014 to EUR 129.6 million due to the dividend payment of
EUR 29.9 million, the working capital build-up and the repayment of
non-current financial liabilities. Net debt declined from EUR 466.9
million at the end of the year 2014 to EUR 448.9 million at June 30,
2015 due to a favorable cash flow development.

Equity amounted to EUR 549.5 million at June 30, 2015 after EUR 493.9
million at December 31, 2014. The equity ratio rose from 26.5% at the
end of the financial year 2014 to 29.4% at June 30, 2015.

Outlook The economic framework conditions do not indicate a
significant recovery in the main customer markets for the second half
of 2015. Weak domestic demand in China leads to expectations that
export activities for Chinese steel will continue to increase, which
causes an additional burden on our steel customers outside of China.
Important industrial metals such as aluminum, copper, nickel and tin
reached new five-year lows in July 2015. RHI expects a
currency-driven increase in revenue of more than 3% for the year
2015. In this environment and provided that the exchange rates remain
stable, the operating EBIT margin will amount to roughly 8%, contrary
to previous expectations of roughly 9%.

in EUR million 1H/15 1H/14 Delta 2Q/15 1Q/15 Delta
Revenue 902.0 839.1 7.5% 477.9 424.1 12.7%
EBITDA 102.5 104.7 1) (2.1)% 51.3 51.2 0.2%
EBITDA margin 11.4% 12.5% (1.1)pp 10.7% 12.1% (1.4)pp
Operating EBIT 2) 68.6 71.8 (4.5)% 34.1 34.5 (1.2)%
Operating EBIT margin 7.6% 8.6% (1.0)pp 7.1% 8.1% (1.0)pp
EBIT 68.6 72.1 (4.9)% 34.1 34.5 (1.2)%
EBIT margin 7.6% 8.6% (1.0)pp 7.1% 8.1% (1.0)pp
Profit before income tax 63.0 62.6 0.6% 33.1 29.9 10.7%
Profit from continuing operations 44.6 42.6 4.7% 23.5 21.1 11.4%

1) adjusted for income from the reversal of investment subsidies recognized as
liabilities
2) EBIT before impairment and restructuring expenses and result from Chapter 11
proceedings

The report for the first half of 2015 is available for download at the RHI
website: www.rhi-ag.com/ Investor Relations / Financial Reports

Further inquiry note:
RHI AG
Investor Relations
Mag. Simon Kuchelbacher
Tel: +43-1-50213-6676
Email: simon.kuchelbacher@rhi-ag.com

end of announcement euro adhoc
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issuer: RHI AG
Wienerbergstrasse 9
A-1100 Wien
phone: +43 (0)50213-6676
FAX: +43 (0)50213-6130
mail: rhi@rhi-ag.com
WWW: http://www.rhi-ag.com
sector: Refractories
ISIN: AT0000676903
indexes: ATX Prime, ATX
stockmarkets: official market: Wien
language: English