RHI Annual Report >> 2002
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RHI Annual Report >> 2002 2002 Table of contents Board members 4 Foreword by the CEO 5 RHI Group 6 RHI Refractories 14 Heraklith 22 Engineering 26 RHI share 28 Consolidated financial statements 2002 31 RHI AG 2002 report 71 Addresses 76 2002 RHI Refractories Refractories produces high-grade, non-substitutable ceramic products, crucial to all high-temperature production processes exceeding 1,200o C. Under the new RHI Refractories brand, we supply key industries such as steel, non-ferrous metals, cement & lime, glass, as well as environmental technology, energy and chemicals. This division is now the world market and technology leader and the core business of the RHI Group. Heraklith Insulating, the remit of the Heraklith group, is one of the leading suppliers of insulating materials to the construction sector in Europe. Its key products aimed at markets in Central and Eastern Europe are solutions made of rock wool and wood-wool building boards. Board members Board of Management Supervisory Board Dr. Helmut Draxler Michael Gröller Chief Executive Officer Vienna, Austria RHI Management Board Member since Member and Deputy Chairman January 14, 2002 since February 15, 2002; Dr. Andreas Meier Chairman since May 27, 2002 Deputy Chief Executive Officer; Gerd Peskes Refractories Division; Düsseldorf, Germany RHI Management Board Member since Chairman since February 15, 2002; January 1, 1999 Deputy Chairman since May 27, 2002 Dr. Eduard Zehetner Dr. Walter Ressler Chief Financial Officer; Villach, Austria RHI Management Board Member since Chairman until February 15, 2002 November 19, 2001 Maximilian Ardelt Roland Platzer Munich, Germany Insulating Division; Stanislaus Prinz zu Sayn Wittgenstein-Berleburg RHI Management Board Member since Munich, Germany January 1, 1999 DDr. Erhard Schaschl Vienna, Austria Gerd Klaus Gregor Berndorf, Austria Member since February 15, 2002 Dr. Cornelius Grupp Lilienfeld, Austria Member since July 4, 2002 Employee representatives: Georg Eder Ferndorf, Austria Josef Horn Trieben, Austria Leopold Miedl Vienna, Austria Karl Wetzelhütter Breitenau am Hochlantsch, Austria In addition, Dr. Friedrich Nemec (until July 4, 2002, Deputy Chairman), served on RHI’s Supervisory Board during the reporting period. 4 Board members 2002 Foreword by the CEO The aftermath of a critical year for RHI in >> Refractories, which is marketed At this point, I wish to thank on behalf of 2001, during which asbestos litigation in under the RHI Refractories brand, the Management Board all our staff and the US shook the group to its very core, managed to strengthen its world mar- employee representatives for their was still very much apparent at the ket position despite the difficult eco- continuing loyalty to the company beginning of 2002. As RHI was no longer nomic climate, substantially improv- throughout these very difficult times. in a position to meet the financial ing its earnings power. The high quality Thanks to their skills and commitment, demands of its US investments, it was of our products and our customer RHI is now right back on track towards forced to withdraw its support of the US specific expertise in high-temperature a future in line with the expectations of firms. The US management therefore systems played a decisive role here. our investors. We trust that the steps we took the decision to file Chapter 11 for have taken and the forward-looking the US firms, which were deconsolidated >> The Insulating Division, managed by activities we have ve initiated in 2002 by RHI as of December 31, 2001. Heraklith AG, struggled with the will inspire our stock performance as slump in the construction sector, well. A positive going-concern forecast for our particularly in Germany. Nevertheless worldwide activities not including our US it improved its EBIT and cash flow on All the best! interests enabled us to head off insol- the previous year through restruc- vency proceedings, and formed the basis turing and rationalization, despite only Dr. Helmut Draxler for an extensive capital restructuring marginal growth in sales revenue. concept. At the extraordinary meeting of stockholders on February 15, 2002, the >> Simplification of the portfolio con- Management Board was authorized by tinued, with more focus placed on an overwhelming majority to carry out a core business. The engineering conditional capital increase with a con- companies were sold off, and this vertible bond issue, a vital element of had a positive impact on the RHI the turnaround. Agreements made with Group’s liquidity. banks have secured the group’s liquidity for years to come, enabling us to finance We critically assessed our strategy in the capital expenditure required to 2002, deciding to focus on expansion of consolidate and strengthen our world the refractories division to boost cash market position. flow and enterprise value. We have drawn up a blueprint for expanding our All in all, the year 2002 witnessed the activities in China. The construction of a group’s commercial turnaround and new refractories plant in this key market portfolio simplification. The figures will significantly enhance RHI presented in this report provide welcome Refractories’ position once again. evidence that the capital restructuring has exceeded our expectations. Both In spite of the rather subdued forecast sales revenue (adjusted for US invest- for the world economy in 2003, earnings ments), EBIT, net income and cash flow prospects for both the refractories and have fared well, debt retirement in 2002 insulating divisions are positive. We will has been faster than planned. continue to improve our market position and actively take up the challenges we face. Foreword 5 RHI Group RHI AG, which has its headquarters in Vienna, is one of the largest industry groups in Austria. Its share is included in the Austrian Traded Index (ATX) and is a member of the Prime Market of the Vienna Stock Exchange. After undergoing successful restructuring, optimizing its portfolio and achieving the turnaround in results in 2002, RHI will focus on refractories, its core competence. RHI Refractories has a highly attractive international production and sales network and will build on its strong position to grow the business in earnings and cash flow terms. The Insulating Division, headed by Heraklith AG, will continue to focus on growth markets in Central and Eastern Europe, which will pave the way for future strategic partnerships. RHI Group in E million 2002 2001* Sales revenue 1.351,9 1.867,2 EBITDA 143.4 -24.2 EBIT 85.2 -114.3 Net income/loss for the year 65.9 -863.1 Employees 8,473 11,086 * The figures for 2001 still contain the refractories investments in the USA, which were deconsolidated at December 31, 2001. EBITDA and EBIT for 2001 were affected by special one-off, extraordinary factors in addition to the operating activities of the group. These include writedowns, one-off expenses and provisions for risks. 6 RHI Group 2002 RHI back on course after turnaround in 2002 >> Portfolio restructuring successful, EBIT margin for 2002 at 6.3% EBIT 85.2 in E million 2001 2002 -114.3 >> Cash flow from operating activities facilitates debt retirement Cash flow from 81.6 operating activities in E million 2001 2002 -106.6 >> Capital restructuring targets exceeded in 2002 Development of gross financial payables in 2002 400.0 in E million 670.3 -136.4 mezzanine capital -163.9 convertible bond 370.0 cash flow 2002 1.1.2002 31.12.2002 RHI Group 7 RHI Group 2002: Capital restructuring successful, portfolio optimized, turnaround in results achieved The year 2002 signified a break with the Extensive capital restructuring This step was triggered by the number past and a new start, following a critical secures group’s future of asbestos litigation claims lodged year in 2001. The events listed below against US companies in 2001, which shaped the RHI Group and probably Bolstered by the international earnings had spiraled to an extent far exceeding make 2002 the most important year in power of the refractories business the limit covered by liability insurance. As the company’s history. outside the US, RHI’s core Austrian RHI was neither willing nor able to meet >> New team takes up office on banks declared themselves willing in these claims, the RHI Group suspended RHI’s Management Board November 2001 to provide a e 200 its financing of its US subsidiaries. The >> Concerted effort to solve the senior debt credit facility for a wholesale overwhelming majority of the US com- US asbestos crisis restructuring of the group’s capital and panies have since filed Chapter 11 of the >> Extraordinary meeting of net worth. This has enabled RHI to meet US Bankruptcy Code and are currently stockholders lends support to its long-term obligations to customers, undergoing reorganization. capital restructuring concept suppliers and other creditors. >> Convertible bonds worth The consequent deconsolidation of the e 144.72 million issued After detailed analysis of the legal and US companies at December 31, 2001 >> Engineering division sold economic implications of all available meant that the investments held in the >> Refractories, our core business, con- options, the company took a landmark companies concerned and the loans firms worldwide earnings power in 2002 decision at the end of 2001 to focus the granted to them had to be written down >> RHI achieves turnaround in results group’s activities on the commercially in the 2001 financial statements. Due to and cash flow attractive refractories business not the charges taken and provisions