Finnish steelmaker Rautaruukki (Ruukki) has revised its guidance for 2012. Instead of growing about 5% as estimated earlier, net sales are now estimated to remain at the same level as the previous year. Comparable operating profit for the second half of the year is now estimated to remain at the same level as for the first half. This means negative comparable operating profit for the whole year. It was earlier estimated that comparable operating profit for the whole year would be at the same level as in 2011. Cash flow for the whole year is expected to improve on the situation at the end of June and to be clearly better than the previous year.

Ruukki’s outlook for 2012 has changed in respect of the steel business. Based on the market outlook at the end of the second quarter, average selling prices of steel products were expected to remain at the same level or to show a moderate rise. A fall in the global market prices of raw materials has put downward pressure also on the prices of steel products and decreased demand. In a very uncertain market environment and while the costs of raw materials are falling, customers have destocked and pushed back their orders. This has been clearly reflected in weaker ordering activity than earlier, especially as regards standard products. Under the circumstances, Ruukki estimates that its net sales in 2012 will remain at the same level as in the previous year. Net sales were earlier estimated to grow about 5%.

There is typically a delay of around one quarter before lower raw material prices are reflected in Ruukki’s production costs. This is because of contracts signed with raw materials suppliers and the normal rotation of raw material stocks. The delay referred to above and the decline in the market prices of steel products mean that Ruukki’s profitability will be below that forecast earlier. Comparable operating profit for the second half of the year is now estimated to remain at the same level as for the first half. This means negative comparable operating profit for the whole year. It was earlier estimated that comparable operating profit for the whole year would be at the same level as in 2011.

The efficiency projects initiated earlier in the year in the steel and construction businesses have progressed to plan.

Earlier guidance:
Net sales in 2012 are estimated to grow about 5 per cent. Comparable operating profit is estimated to be at the same level as in 2011.

Revised guidance:
Net sales in 2012 are estimated to remain at the same level as the previous year. Comparable operating profit for the second half of the year is now estimated to remain at the same level as for the first half. This means negative comparable operating profit for the whole year. Cash flow for the whole year is expected to improve on the situation at the end of June and to be clearly better than the previous year.