JOHANNESBURG (miningweekly.com) – Finnish company Ruukki, which bought South Africa's Mogale Alloys last year, on Friday reported first-quarter revenue growth, lifting revenue to €54,4-million, from €44,5-million a year earlier, reflecting a slow, but definite economic recovery.

The company reported a €4,4-million loss for the three-month period, compared with a loss of €5,6-million in the first quarter of 2009.

Ruukki CEO Alwyn Smit said that after a challenging 2009, the economic recovery was positively reflected in the company's business during the quarter.

"However, in the minerals business the signals were mixed, as the market prices fluctuated, owing to a periodic overcapacity and the group's production suffered from a lower-than-expected furnace availability in South Africa. The production problems will, however, be solved this year," Smit assured.

Ruukki's minerals business showed revenue of €30-million for the quarter.

Smit said that Ruukki's minerals units' revenue more than doubled in the period under review from €12,8-million reported last year.

The increase was mainly based on the South African product sales, since Mogale Alloys was only acquired at the end of May 2009.

The Ruukki group's minerals business consists of mining and beneficiation operations in Turkey, chromite concentrate processing in Germany and procurement and sales operations in Malta, and smelting operations in South Africa.

However, Smit said that despite recent positive signals, the current state of the minerals sector was expected to remain volatile.

"One of the main risk factors for the group's profitability is input prices, mainly the development of the price of raw materials and electricity, which remain unpredictable."

"In general, the future outlook for the group is positive with market demand and prices showing an upswing, especially in emerging markets. China dominates the market for stainless steel production, ferrochrome and chrome ore as the biggest importer and demand is also increasing in other emerging economies.

The Ruukki group said that it would focus on raising its production volume during the year, by increasing its processing furnace capacity and its own mining activities.

Smit noted that the group had segmented the sales of its different product groups are to exploit the demand in different geographic markets.

Meanwhile, the group noted that the house building business was demonstrating the most potential in the wood business. The group reported revenue of €24,5-million for the sector.

"There was a clear pick-up in the number of house orders compared to 2009, and the trend is expected to continue," said Smit.

Ruukki noted that along with focusing on popular turnkey houses, the Group's house building business aims to expand its product range. The launch of a weekend house collection was finalised in early May."

For the three months ended March 31, 2010, the company's house building business recorded a revenue of €9,2-million.

"The house building business is also looking into vertical integration opportunities in land and property development. The business is well positioned to seize market opportunities and further increase its profitability if the upturn continues," concluded Smit.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.