REG - RHI Magnesita N.V. - Q1 2025 Trading Update

RHI Magnesita NVAnnouncement

07/05/2025 07:00

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RNS Number : 5693H  RHI Magnesita N.V.  07 May 2025

7 May 2025

RHI Magnesita N.V.

("RHI Magnesita" or "the Group")

 

Q1 2025 TRADING UPDATE

 

RHI Magnesita, the leading global supplier of high-grade refractory products,
systems and solutions, today provides an update on trading for the three
months to 31 March 2025 ("Q1").

Downside risks to the 2025 trading outlook have increased, driven by a weak
outlook for H1 performance and rising global trade tensions, which could
negatively affect the Group's end markets.

Q1 trading

First quarter trading conditions became more challenging, reflecting lower
sales volumes, a continued decline in project business in the glass and
non-ferrous metals sectors worldwide and lower pricing for cement and steel
markets in India and the Middle East.

EBITA margins in the first quarter were lower, as expected, impacted by a
combination of lower volumes in high-margin project business, weaker finished
goods pricing and higher cost of purchased raw material.

Reflecting the demand backdrop, the Group continues to operate its plants at
lower levels of capacity utilisation compared to Q4 2024, with fixed cost
under-absorption further weighing on margins. As part of its ongoing Network
Optimisation Programme ("NOP"), the Group has announced the closure of its
Wetro plant in Germany. Alongside the NOP, management has initiated additional
cost saving measures targeting both Cost of Goods Sold and Selling, General
& Administration expenses.

In response to higher unit costs, a price increase programme is being
implemented to restore margins over the remainder of the year, although
securing increases is likely to be more challenging in the current market
environment. In particular, India and West Asia markets are experiencing
elevated competitive pressure from low-cost imports of refractories from China
and overcapacity that has been built in India recently by international and
domestic refractory competitors, impacting both margins and sales volumes.

Financial position

As expected, net debt increased to €1.6 billion as at 31 March 2025,
primarily due to the completion of the Resco acquisition and the payment of
the remaining €346 million of cash proceeds. This was partially funded by a
new €200 million syndicated term loan.

Working capital rose modestly, in line with expectations of increased sales in
Q2. Guidance for year-end working capital intensity remains at c.24%,
excluding any potential impact from global supply chain disruptions stemming
from tariff changes.

Following the payment related to the Resco acquisition, gearing - measured as
the ratio of net debt to Pro Forma Adjusted EBITDA - is expected to be c.2.9x
at the half year, above the Group's target range of 2.0 to c.2.5x. Gearing is
anticipated to reduce through the second half and, based on current earnings
and cash flow expectations, would return towards c.2.5x by year end.

Strategic developments

RHI Magnesita pursues a local for local production strategy and benefits from
vertical integration in key raw materials. This provides some protection
against potential adverse transactional impacts arising from tariffs, compared
to other industry participants who rely on imported raw materials from third
party producers.

The Group's growth strategy is primarily focused on M&A. In Q1, the Group
completed the planned €391 million acquisition of Resco, marking a
significant strategic milestone in strengthening its presence in the North
American market. A key benefit of the Resco transaction is the opportunity to
increase domestic US production of many products which are currently imported
to the US. However, the relocation and ramp-up of production to fully capture
these benefits will take approximately 18 months, in line with normal
industrial capacity projects.

Outlook

First quarter trading conditions were weaker as expected, with a reduction in
both revenues and margins in the period. Performance is expected to improve in
the second quarter based on the current order book as cost saving initiatives
support profits somewhat. With the benefits of price and cost actions weighted
towards the latter part of the year, the first half is now expected to
contribute 35-40% of full-year Adjusted EBITA, with 60-65% weighted to the
second half, also supported by Non-ferrous Metals project volumes postponed
from H1.

Whilst the current order book still could allow delivery of full year guidance
for Adjusted EBITA to be modestly ahead of 2024 including Resco, the Group is
mindful of the elevated risk posed by current macroeconomic volatility. This
could impact end market demand and customer production volumes with the
additional possibility of instability in global supply chains. The weaker US
dollar will also impact earnings from the North America region in euro terms
and if the current exchange rate is maintained for the remainder of 2025 this
would represent a c.€15 million incremental headwind to Adjusted EBITA.

 

Stefan Borgas, Chief Executive Officer of RHI Magnesita, said:

"RHI Magnesita continues to navigate difficult market conditions as end
markets and customer production volumes remain subdued and as industrial
projects are being postponed into the second half of the year. New
uncertainties surrounding global trade and tariff arrangements are adding
complexity to our planning processes and risk of further project
postponements. We have implemented measures to support margins by reducing
costs and executing price increases as well as progressing more structural
drivers including production network optimisation and the realisation of
synergies from recent acquisitions. Guidance for 2025 Adjusted EBITA to be
modestly ahead of 2024 is maintained, although downside risks have increased
and a step up in profitability in the second half will be required to meet
expectations."

 

Conference call

A conference call for analysts will be held at 8:15am UK time to discuss the
trading update:

 Webcast (live and on-demand)  https://www.investis-live.com/rhimagn
                               (https://www.investis-live.com/rhimagnesita/6807712fd645df000ef2e408/rbwrt)
                               esita/6807712fd645df000ef2e408/rbwrt
                               (https://www.investis-live.com/rhimagnesita/6807712fd645df000ef2e408/rbwrt)
                               (https://url.de.m.mimecastprotect.com/s/KWZQC160QLCNxovrcL35hi?domain=investis-live.com)

 Dial in (listen only)         International:       +44 20 3936 2999

                               UK toll-free:         0800 358 1035

                               Access code:         593066

AGM

Further to the Notice of Meeting issued on 27 March 2025, the Company will
hold its Annual General Meeting ("AGM") today at 14:00 CET. Voting results
from the AGM will be made available shortly after the meeting.

 

For further enquiries, please contact:

Chris Bucknall, Head of Investor Relations

Tel +43 699 1870 6490

E‐mail: chris.bucknall@rhimagnesita.com
(mailto:chris.bucknall@rhimagnesita.com)

 

Media:

Hudson Sandler

Andrew Hayes

Tel +44 020 7796 4133

E-mail: rhimagnesita@hudsonsandler.com

 

About RHI Magnesita

RHI Magnesita is the leading global supplier of high-grade refractory
products, systems and solutions which are critical for high-temperature
processes exceeding 1,200°C in a wide range of industries, including steel,
cement, non-ferrous metals and glass. With a vertically integrated value
chain, from raw materials to refractory products and full performance-based
solutions, RHI Magnesita serves customers around the world, with over 20,000
employees and contractors in 65 main production sites (including raw material
sites), 12 recycling facilities and more than 70 sales offices. RHI Magnesita
intends to leverage its leadership in terms of revenue, scale, product
portfolio and diversified geographic presence to target strategically those
countries and regions benefiting from more dynamic economic growth prospects.

The Group is listed within the Equity Shares (Commercial Companies) category
("ESCC") of the Official List of the London Stock Exchange (symbol: RHIM) and
is a constituent of the FTSE 250 index, with a secondary listing on the Vienna
Stock Exchange (Wiener Börse). For more information please
visit: www.rhimagnesita.com (http://www.rhimagnesita.com/)

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