Contact Us Group Products & solutions Investor Relations Press lounge Careers Contact | German News Share Equity Story Disclaimer Financial Reports Calender Presentations Analyst Research Conference Calls General Meeting Contact & Service Contact investor.relations@rhi-ag.com Home Investor Relations Equity Story Equity Story Company profile RHI is a globally operating supplier of high-grade refractory products, systems and services, which are indispensable for industrial high-temperature processes exceeding 1,200 °C. With roughly 8,000 employees, 33 productions facilities and more than 70 sales offices, RHI serves more than 10,000 customers from the steel, cement, nonferrous metals, glass, energy and chemical industries in nearly all countries of the world. RHI produces more than 1.7 million tons of refractory products per year and supplies customized product and system solutions. Refractory linings made by RHI ensure that a wide range of aggregates including steel ladles, cement rotary kilns, copper converters or glass furnaces withstand extreme thermal, mechanical and chemical stress. The production of refractories is resource-intensive. The naturally occurring raw materials magnesite and dolomite are used as basic materials. Roughly 70% of the global deposits are located in three countries: China, North Korea and Russia. RHI covers approximately 80% of its requirements from eight Group-owned raw material sites and is therefore largely independent of raw material markets. The RHI Group attaches great importance to research. The innovative power, which has made RHI the global technology leader, is based on decades of research and development activities, which have given RHI a leading edge. The company invests roughly € 20 million annually in this future-oriented segment. Demand for refractory products is primarily driven by growing prosperity, the level of industrial production and infrastructure projects. Although refractory products account for only 1 to 3% of the production costs of customer industries, they are crucial to the quality of the products manufactured. In the year 2013, RHI realized revenues amounting to € 1,754.7 million. The charts below show the revenues by segment and region. Strategy & financial targets The RHI Group has pursued a clearly defined strategy for several years based on expanding market presence in the emerging markets, increasing the level of self-sufficiency in magnesia raw materials and on an optimized cost structure. In the year 2012, strategic and financial targets were derived from the vision “We lead the industry. Everywhere. Anytime.” and broken down to the six strategic business units (Linings, Flow Control, Nonferrous Metals, Cement/Lime, Glass, Environment/Energy/Chemicals) in the course of a structured strategy update. The targets to be realized by the year 2020 include an increase in revenues to up to € 3.0 billion and an EBIT margin of 12% over the economic cycle. These target figures are based on economic growth of at least 1.5% in the European Union, at least 2.5% in den USA and at least 5.0% in the emerging markets from the year 2015 onwards. If these assumptions do not come true, the growth target will have to be revised. The Group intends to achieve the planned growth through product innovations and price and volume increases on the one hand, and through selective acquisitions on the other. Revenues should be increased to up to € 2.5 billion by 2020 based on organic growth, with an average organic growth target of more than 4.0% per year. In comparison, the RHI Group’s refractories revenues rose from € 1,033.6 million to € 1,754.7 million in the period from 2003 to 2013 without any major acquisitions, which corresponds to annual average growth of revenues of roughly 5.4%. In addition, the Group aims to expand revenues by roughly € 500 million by means of acquisitions, which would further improve the market position of the RHI Group, especially in the emerging markets, and contribute to the consolidation of the refractories market by realizing the corresponding synergy effects and economies of scale. The intended improvement of the EBIT margin should result from a greater share in revenues of the emerging markets, where higher margins can be realized than in the saturated markets, from a higher self-sufficiency level in magnesia and a further optimization of the plant concept. The Strategy 2020 focuses on the following four areas: >> Profitable growth In the year 2013, RHI generated 57% of its revenues in the emerging markets; in the year 2020, this share may already amount to roughly 70%. RHI strives to participate in the further catching-up process of the emerging markets and to grow together with its customers in these markets. The chart below shows the development of crude steel production in million tons (source: worldsteel & CRU). While the number of motor vehicles per 1,000 inhabitants in China and India ranks in the low double-digit range, more than 800 vehicles per 1,000 inhabitants are registered in the USA, according to data of the World Bank. Per capita steel consumption in India is in the medium double-digit kilogram range, while figures significantly exceeding 300 kilograms per capita are realized in Europe, the USA or even China. This results in enormous growth potential, which RHI intends to increasingly benefit from in the years to come. Following the acquisition of a 69.6% share in Orient Refractories Ltd. at the end of April 2013, the market position in India was strengthened further. After the USA and Germany, India has become the third most important market for the RHI Group and will continue to gain importance in the coming years. The chart below shows crude steel consumption in kilogram per capita in relation to GDP per capita (source: worldsteel & IMF). >> Raw material integration Raw materials account for roughly 60% of the overall production costs at RHI. Access to and the availability of high-quality raw materials are crucial to refractory products because they have a significant influence on their performance characteristics. Roughly 70% of the global magnesite deposits are located in China, North Korea and Russia. Due to growing demand and export restrictions in China, prices for the two main raw materials, fused magnesia and sintered magnesia, have more than doubled in the last ten years. For this reason, RHI has increasingly invested in raising the level of self-sufficiency in magnesia raw materials in the past years. The expansion of the raw material capacities in Turkey and Austria and acquisitions have enabled RHI to increase the self-sufficiency level to roughly 80%. An alternative raw material production method based on seawater has also been used as part of this expansion. Despite the difficulties which occurred at the new plant in Porsgrunn, Norway, in 2013, RHI will adhere to its raw material integration strategy and considers the access to its own raw materials a strategic competitive advantage. The charts below show the price development of fused magnesia and dead-burned magnesia in US-Dollar per ton and the development of RHI's self-sufficiency level in magnesia. >> Innovation As the technology leader, RHI focuses on the development of solutions that are tailored to customer trends. New standards in the industry can only be set through continuous and innovative processes. Research focuses on four strategic areas: substitution of raw materials, energy efficiency, functional products and recycling. Innovation at RHI extends from the product level to all business processes and involves all employees. In order to underline the importance of innovation to the RHI Group, a separate innovation and IP management department, which reports directly to the CEO of the Group, was established in the year 2013. The main tasks of this department include the identification and substantiation of innovation potential, the preparation of the decision-making basis necessary for implementation, and the support of all organizational units involved in their realization.. >> Business Excellence In order to stay competitive in the market in the long term, all business processes have to be adapted continuously in order to better serve the customer and to optimize costs. In addition, it is necessary to adjust production capacities and to bring them closer to the customer to ensure shorter lead times, to keep the required working capital low and to optimize transport and logistics costs. Due to weak capacity utilization of the European plants and lower growth rates in Europe, the closure of one of the largest sites of the RHI Group in Europe (Duisburg, Germany) was decided in the year 2013 in order to ensure better utilization of the production facilities and a corresponding reduction of fixed costs. RHI on its way of executing the strategy Implementation Evaluation Profitable growth 4th tunnel kiln Dalian, China ZAO Podolsk, Russia Orient Refractories, India Brazil (plant, JV or M&A) Russia (plant, JV) Raw material integration Acquisition PPL (Ireland) Acquisition SMA (Norway) incl. investment in melting plant Expansion of mining capacity in Turkey Opportunistic projects Innovation & Business Excellence Restructuring of capacities (GER, FRA, CAN, GBR, ZAF) Centralized org. structure New recipes and brand concept for European raw materials Cost improvement program US (brownfield or asset deal) Restructuring of capacities in Europe Home | Impressum | Sitemap | RHI Contact