REG - RHI Magnesita N.V. - Trading Update

RHI Magnesita NVAnnouncement

15/06/2023 07:00

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RNS Number : 7720C  RHI Magnesita N.V.  15 June 2023

RHI Magnesita N.V.

("RHI Magnesita" the "Company" or the "Group")

TRADING UPDATE

 

RHI Magnesita, the leading global supplier of high‐grade refractory
products, systems and solutions, today provides an update on trading for the
five months ended 31 May 2023 (the "Period").

 

Trading update for the five months ended 31 May 2023

The momentum of improving profitability and margins delivered in Q1 2023
continued in April and May, as refractory pricing was largely maintained
against a background of reducing costs.

Refractory sales volumes in the Period excluding M&A were 7% lower year on
year, in line with overall market demand. Steel, cement and glass demand
outside of India remains soft due to a slowdown in construction activity,
with some glass project postponements now evident. Demand in the non-ferrous
metals segment continues to be resilient. As anticipated due to the subdued
demand backdrop and reducing input costs, the Group is beginning to experience
sales price deflation in a number of its markets which is expected to continue
and possibly accelerate through the remainder of the year.

Refractory EBITA margin contribution for the Period, which excludes vertical
integration benefits, was better than expected, supported by cost deflation in
April and May, as the cost of freight and purchased raw material reduced,
partially offset by weaker fixed cost absorption due to lower production
volumes.

The continued lower pricing environment for magnesite-based raw materials
means that the Group's vertical integration EBITA margin contribution remains
subdued and in line with the 1.8% of Group margin delivered in the second half
of 2022.

As a result, the overall Adjusted EBITA margin for the Period was 12.1% (2022:
11.6%), delivering Unaudited Adjusted EBITA of €174 million (2022: €155
million).

 

Financial position

Net debt to EBITDA remains at a similar level to the 2.1x reported at 31 March
2023, including a 12 month historic contribution from businesses acquired
during the period.

Absolute net debt at 31 May 2023 was largely unchanged from 31 December 2022,
supported by strong operating cashflow. The Group continues to retain
significant liquidity of €1.2 billion.

Net Working capital (before consolidation of M&A) was down slightly from
its 31 December 2022 level, as reductions in inventory and accounts
receivable were largely offset by lower accounts payable. The Group continues
to prioritise security of supply for its customers in order to support recent
market share gains.

Total capital expenditure in the five months to 31 May 2023 was €42 million,
out of overall guidance of €200 million for 2023, with spending weighted
towards the second half.

M&A increased net debt by €268 million in the first five months of the
year, which was partially offset by the Qualified Institutional Placement
("QIP") by RHI Magnesita India Ltd, which raised approximately €101 million
in April 2023. The QIP is to be followed by an equity investment of €22
million by the Group in RHI Magnesita India Ltd via a Preferential Issue which
is expected to complete in June 2023. In the second half of the year the
previously announced acquisition of Seven Refractories for a cash
consideration of €95 million is expected to be completed.

 

Outlook

The outlook for the Group's key end markets and consequently customer volumes
remains uncertain, with the order book currently suggesting only a moderate
volume increase in H2, if at all, resulting in ongoing under-absorption of
fixed costs. Pricing pressure is expected to continue and possibly accelerate
through the remainder of the year.

Supported by the stronger than expected performance in the first five months
of the year, the Board now expects a modest outperformance on its earlier 2023
EBITA and EBITA margin guidance.

Leverage, measured as a ratio of net debt to EBITDA, is expected to remain
above 2.0x as the Group further executes on its M&A pipeline.

 

For further enquiries, please contact:

Chris Bucknall, Head of Investor Relations

Tel +43 699 1870 6490

E‐mail: chris.bucknall@rhimagnesita.com

 

For media enquiries:

Hudson Sandler

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 around 13,500
employees in 33 main production sites 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 benefitting from more dynamic economic growth
prospects.

The Group maintains a premium listing on 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 prime segment of the Vienna Stock Exchange (Wiener
Börse). For more information please visit: www.rhimagnesita.com
(http://www.rhimagnesita.com)

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (596/2014/EU).

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