EANS-News: RHI AG / Results of the first quarter 2017

--------------------------------------------------------------------------------
Corporate news transmitted by euro adhoc. The issuer/originator is solely
responsible for the content of this announcement.
--------------------------------------------------------------------------------

quarterly report

* Increase in sales volume and revenue driven by improved business
conditions * Positive start to the year due to higher deliveries and
improved capacity utilization * Merger control clearance for the
planned combination with Magnesita filed for in Europe and Brazil

In the first quarter of 2017, the RHI Group's sales volume increased
by 4.8% compared with the same period of 2016 to roughly 483,000
tons. While the Steel Division recorded an increase by 5.3% due to
higher deliveries in Europe, North America, Africa and the Middle
East, the Industrial Division's sales volume rose by 10.4% due to a
positive development in nearly all business units.

The RHI Group's revenue in the first quarter of 2017, at EUR 418.8
million, exceeded the revenue of the comparative period of 2016, at
EUR 389.7 million, and was slightly lower than in the fourth quarter
of 2016, at EUR 423.9 million.

Operating EBIT amounted to EUR 37.9 million in the first quarter of
2017, after EUR 30.3 million in the comparative period of 2016, thus
also exceeding the figure of the fourth quarter of 2016, at EUR 25.2
million. The increase compared with the first quarter of 2016 is
among other things due to a friendlier market environment in many
customer industries and the related better order situation as well as
the resulting higher utilization of production capacities and product
mix effects. The operating EBIT margin, at 9.0% in the first quarter
of 2017, thus exceeded that of the comparative period of 2016, at
7.8%, and that of the fourth quarter of 2016, at 5.9%. The external
costs associated with the planned business combination of RHI and
Magnesita incurred in the past quarter total EUR 3.8 million.

EBIT amounted to EUR 32.6 million in the first quarter of 2017 and
primarily includes a negative net effect from the power supply
contract in Norway amounting to EUR 4.3 million as a result of lower
electricity future prices.

Equity was EUR 555.0 million at March 31, 2017, compared with EUR
524.0 million at December 31, 2016. This corresponds to an equity
ratio of 30.5%. Working capital increased from EUR 465.1 million at
the end of the year 2016 to EUR 491.3 million at March 31, 2017. This
is primarily attributable to higher inventories due to an increase in
the order level by roughly 15% compared with December 31, 2016. Free
cash flow amounted to EUR 12.0 million in the past quarter compared
with EUR 22.1 million in the same period of 2016. Net debt declined
slightly from EUR 332.8 million at the end of 2016 to EUR 325.2
million at March 31, 2017. The number of employees amounted to 7,460
at the end of the past quarter.

Outlook In its forecast published in April 2017, the International
Monetary Fund predicts global economic growth of 3.5% in the current
year after 3.1% in the year 2016. However, there is considerable
uncertainty regarding the impact of the policies of the newly elected
US government. Although the environment in the advanced economies
improved, the pace of growth in the emerging markets will continue to
influence the global economy to a significant extent. Based on a
current study, the research institute CRU expects a decline in steel
production in China by roughly 1% in the year 2017 and an increase in
steel production outside China by an ambitious 5%. Based on these
estimates, RHI expects a more positive market environment in 2017.
The focus will stay on the generation of free cash flow in the
current financial year in order to reduce net debt further. RHI is
currently working on meeting the conditions precedent to the
successful closing of the planned combination with Magnesita (the
"Combined Group") and is preparing the integration of the two
companies. In the context of these activities, external costs will be
incurred.

In the past quarter, uncertainties arose due to a shortage in the
supply situation of refractory raw materials in China. Striving to
improve environmental and safety standards, Chinese authorities
introduced stricter requirements and carried out production controls.
As a result, many local manufacturers of sintered and fused magnesia
had to completely shut down their production in the past quarter. Due
to this new situation, market prices are now rising. It can currently
not be estimated when this situation will ease. As raw material
supply from China is getting less secure, supply concepts are adapted
continuously within the RHI Group.

Update on the planned combination with Magnesita RHI filed for merger
control clearance with the competition authorities in Brazil at the
end of March and in Europe at the beginning of May and expects to
have a clearer picture of the outcome of the proceedings around the
end of the first half of 2017.

Based on their financial statements for the year 2016, the combined
revenue of RHI and Magnesita amounted to approximately EUR 2.5
billion. RHI has revised its aspirational financial targets1)for the
Combined Group in the course of a corporate strategy update. These
targets replace any earlier financial targets (which are thus
withdrawn) for the Combined Group and include the following. In the
medium term, RHI's aspiration for the Combined Group is to have
organic revenue growth in line with the volume growth in its
customers' industries and an operating EBIT margin of more than 12%
after capturing the Combined Group's envisaged net synergies of
approximately EUR 70 million in case of a delisting of Magnesita.
RHI's aspiration for the Combined Group is to pay stable dividends in
2017 and 2018, in line with RHI's previous years' payment levels. In
the mid- to long-term, however, RHI's aspiration is to increase
dividend payments from the Combined Group, as a result of stronger
cash flow generation resulting from synergies, organic growth and
de-leveraging of the company's capital structure.

1) Management's financial targets are not forecasts and there can be
no guarantee that the actual results will resemble the targets in the
medium term or mid- to long-term. RHI has not defined, and does not
intend to define, "medium term" and "mid- to long-term", and these
financial targets should not be read as indicating that RHI is
targeting such metrics for any particular fiscal year.

Financial Key Figures

in EUR million Q1/2017 Q1/2016 Delta Q4/2016 Delta
Revenue 418.8 389.7 7.5% 423.9 (1.2)%
EBITDA 48.5 43.2 12.3% 40.4 20.0%
EBITDA margin 11.6% 11.1% 0.5pp 9.5% 2.1pp
Operating EBIT 1) 37.9 30.3 25.1% 25.2 50.4%
Operating EBIT margin 9.0% 7.8% 1.2pp 5.9% 3.1pp
EBIT 32.6 27.1 20.3% 15.0 117.3%
EBIT margin 7.8% 7.0% 0.8pp 3.5% 4.3pp
Profit before income tax 30.2 23.8 26.9% 13.8 118.8%
Profit after income tax 18.5 14.8 25.0% 11.9 55.5%

1) EBIT before expenses from derivatives from supply contracts, impairment and
restructuring effects

The report for the first quarter of 2017 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
--------------------------------------------------------------------------------

company: 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

Original-Content von: RHI AG, übermittelt durch news aktuell