Rautaruukki Jumps Most in 16 Years on Profit Target

By James Ludden and Mark Herlihy

Oct. 1 (Bloomberg) -- Rautaruukki Oyj, Finland's biggest producer of carbon steel, jumped the most in 16 years in Helsinki trading after raising its profit margin target through increased sales and cost cuts.

The shares jumped as much as 2.48 euros, or 18 percent, to 16.40 euros ($23.16), and traded at 15.18 euros at 12:11 p.m. local time. That's the biggest intraday gain since Sept. 8, 1992.

Rautaruukki raised its goal for earnings before interest and tax as a proportion of revenue to 15 percent from 12 percent, the Helsinki-based company said in a statement to the country's stock exchange today. Annual cost savings of 130 million euros are expected by the end of 2008 through ``more efficient sourcing and production'' and selling non-core units.

The company, which said July 30 that second-quarter profit declined 5.4 percent to 123 million euros, is cutting costs and selling units in a bid to bolster profit as prices for commodities and power soar. Charges for raw materials such as iron ore and coking coal will add 200 million euros to production costs in 2008, the company said July 30.

``Continued growth'' is expected from the company's main market areas, in particular in Eastern Europe, Rautaruukki said in the statement. The effect of uncertainty in the global economy is ``likely to be less'' in the Nordic region and in Russia and Ukraine, the company said.

To contact the reporter for this story: James Ludden in London at jludden@bloomberg.netMark Herlihy in London at mherlihy1@bloomberg.net.