Ruukki to improve steel business competitiveness

Ruukki Metals is to initiate a project aimed at operations across the division to achieve a permanent annual improvement of around EUR 50 million in earnings performance and also profitable business when production is running at 80 per cent, which is low for the steel industry.

Steel demand in Ruukki Metals' main market area in Europe is forecast to grow moderately during the next few years, but to remain at a lower level than during the previous peak demand in 2007.

However, growth in steel production in China has resulted in clearly higher prices of the raw materials used in steel-making than 2007 price levels.

Demand cycles in the steel market, especially with regard to standard steel products, seem to have become faster due to the change in the business environment described above.

Improving competitiveness
To improve its competitiveness, Ruukki Metals is looking at ways to increase cost efficiency and business flexibility to respond especially to the changed business environment in standard steel products. The markets for special steel products - high-strength, wear-resistant and coated steel products - have grown clearly better than those for standard products in recent years. This situation is not expected to change significantly in the near future.

The Ruukki project
Ruukki Metals is to initiate a project to improve competitiveness. The project aims at a permanent annual improvement of around EUR 50 million in earnings performance and at ensuring business profitability also at a production utilisation rate of 80 per cent, which is low for the steel industry.

The project will kick off with an analysis, among other things, to identify the potential to reduce variable and especially fixed costs, improve the efficiency of business models, increase flexibility in the cost structure and improve the efficiency of support functions.

The analysis will be carried out and the targets set by the end of the first quarter, after which decisions on any further actions will be made. The full EUR 50 million earnings improvement being pursued is expected to be achieved during 2013.