The RHI group 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 approx. 8,000 employees, 32 production plants and more than 70 sales offices, RHI serves more than 10,000 customers in the steel, cement, nonferrous metals, glass, energy and chemicals industries in nearly all countries of the world. Refractory linings made by RHI ensure that different units (for example, steel ladles, cement rotary kilns, copper converters or glass furnaces) resist extreme thermal, mechanical and chemical stress.
Demand for refractory products is mainly 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 in the customer industries, they are decisive for the quality of the products made.
The RHI Group attaches great importance to research. The innovative strength, which has made us the global technology leader, is based on research and development activities established over decades, which provide a decisive leading edge. Roughly € 20 million are invested in this future-oriented segment.
In the year 2012, RHI realized revenues of € 1,835.7 million. The chart below shows revenues by segment and region.
Strategy & financial targets
In 2012, strategic goals were derived from the newly defined vision “We lead the industry. Everywhere. Anytime.” The target until 2020 is to realize revenues of € 3.0 billion and an EBIT margin of 12% throughout the economic cycle.
As part of a structured strategy update, the targets were broken down to the six Strategic Business Units (Linings, Flow Control, Cement/Lime, Nonferrous metals, Glass, Environment / Energy / Chemicals). The aim is to accomplish this growth through increases in price and volume and selected smaller acquisitions. The intended improvement of the EBIT margin should result from a higher contribution to revenues by the emerging markets, where higher margins can be realized than in saturated markets, a higher level of self-sufficiency for magnesia and a further enhancement of the plant concept.
>> Profitable growth
In the year 2012, RHI generated 56% of its revenues in the emerging markets; in the year 2020, this share may already amount to some 70%. We strive to participate in the further catching-up process of the emerging countries and to grow in these markets together with our customers. 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. 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 we intend to increasingly benefit from in the years to come. 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 (especially magnesia) are critical 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 have more than tripled during the last ten years. For this reason, RHI increasingly invests in raising the level of self-sufficiency. The expansion of the mines in Turkey and Austria and acquisitions have enabled us to increase our self-sufficiency level to roughly 80%. In this, an alternative raw material production method based on seawater is also used. RHI strives to maintain the self-sufficiency level stable even during the growth period. 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.
As 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.
>> Business Excellence
In order to stay competitive in the market, production capacities have to be adjusted and transferred closer to the customer. As growth rates are expected to be lower in Europe, an adjustment of pro-duction capacities is required in order to ensure optimal utilization of all plants worldwide. RHI currently works on optimizing the plant structure, which should result in a reduction of inventories. Moreover, all business processes are adapted continuously in order to better serve customers and to optimize costs.
RHI on its way of executing the strategy
|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
|Innovation & |
|Restructuring of capacities|
(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