REG-Vesuvius Plc: Trading Statement

VesuviusAnnouncement

19/11/2024 07:15

19 November 2024

Vesuvius plc - Trading Update

 

Vesuvius plc, a global leader in molten metal flow engineering and technology,
announces the following update for the period 1 July to 31 October 2024.

Summary

-          We have performed robustly in the period delivering market
share gains, resilient pricing, and further cost reductions, despite a
weakening of markets relative to H1 2024

-          Steel markets outside of India and EEMEA remain subdued

-          Foundry markets outside of India also remained subdued,
with in particular, further significant weakening in EU27+UK

-          Continued market share gains in Flow Control and Foundry,
while achieving resilient net pricing

-          In year recurring cost savings ahead of expectations,
increasing from £6m to £9m in FY24

-          Trading Profit expected to be slightly below FY23,
reflecting market conditions, while maintaining RoS margin at c10.2%, both on
a constant currency basis

-          Working capital intensity on track against our year-end
target of 23%

-          Acquisition in Turkey in the strategically important and
growing EEMEA market

-          Second share buyback of £50m launched, supported by our
strong balance sheet

-          Growth initiatives in Flow Control and Asia remain on
track, with projects completing around the year-end

Update on trading since 1 July

Steel markets (World ex China, Iran, Russia, and Ukraine) continued to weaken
in both North America and the EU27+UK, while growth rates in India and EEMEA
slowed. Chinese steel exports remain at elevated levels, with this impacting
production in most regions outside of China.

Foundry markets outside of India also declined compared to H1, with the
EU27+UK in particular, experiencing a significant decline compared to both the
first half of FY24 and the same period in FY23. This level of Foundry activity
was lower than originally anticipated.

We continued to gain market share in both Flow Control and Foundry, reflecting
our strong technological differentiation, and continued to achieve a positive
net pricing performance in Steel while also maintaining net pricing in
Foundry, despite the challenging environment.

Over the period, therefore, the Steel division delivered in line with
expectations, but the Foundry division was impacted by the weakness of the
Foundry end-markets, which was more significant than anticipated. This was
partially offset by increased in-year cost savings in both divisions,
resulting in a slightly lower Group performance than anticipated.

Continued cost management

The three-year cost-savings programme is proceeding as planned. We continue to
target recurring cash cost savings of at least £30m by 2026, with c. £9m
expected to be delivered in 2024, and an exit run-rate in 2024 towards the top
end of the indicated range of £10-15m. Total one-off cash costs in FY24 are
expected to be c. £10m (£12m P&L impact including non-cash charges), which
is part of the planned total of £40m (split between capex and cash operating
costs). In addition, we have taken various short-term cost reduction actions
to protect in-year profit, given the challenging market conditions.

 

Continued cash flow discipline

Average trade working capital as a percentage of revenue (on a 12-month
rolling basis) continues to trend downward, towards our year-end target of
23.0%, and at the end of October 2024 was 90bps lower than the same point in
2023. Capex, excluding leases, for 2024 is expected to be around c. £100m, as
anticipated at the beginning of the year.

 

Launching a second tranche share buyback

Following the recent completion of our first share buyback programme, we are
now announcing a second programme for a further £50m, which we expect to be
transacted in around 6 months, subject to regulatory limits. This demonstrates
our confidence in the ongoing free cashflow generation of the business and our
commitment to return capital to shareholders while maintaining a strong
balance sheet. We expect leverage at the year-end to be towards the lower end
of our target range. Full details of the share buyback are available in the
separate announcement issued today.

 

Acquisition in the growing market of EEMEA

On 15 November 2024 we signed an agreement to acquire a 61.65% stake in
Piromet AS, a Turkish business for €26.2m. Completion is subject to the
typical regulatory approvals and is expected to occur in the first quarter of
FY25. The acquisition will strengthen our Advanced Refractory business in the
fast-growing region of EEMEA and will also allow us to leverage Piromet’s
expertise in robotics and gunning.

 

Outlook

We expect both Steel and Foundry markets to remain subdued for the remainder
of the year and remain cautious on the timing of a recovery. We are mitigating
this temporary end market weakness with further actions, including higher
in-year cost savings. We now anticipate trading profit for FY24 to be slightly
below FY23 on a constant currency basis and in line with current market
expectations.

We remain confident in the attractiveness of the long-term global steel and
foundry market fundamentals and continue to focus on the execution of our
self-help measures, which will leave us well placed when end-markets improve.

 

Technical guidance for FY24, update:

 FY23             Reported FX rates  Restated at FX avg. rates for 10 months to 31 Oct 2024  
 Revenue          £1,929.8m          £1,857.8                                                
 Trading profit   £200.4m            £189.0m                                                 
 Return on sales  10.4%              10.2%                                                   

Net interest charge: c. £16m

Capex (excluding capitalised leases): c. £100m

Exceptional restructuring charge related to cost-saving programme: c. £12m

Restructuring costs, cashflow impact: c. £10m

Current shares in issue (ex ESOP and treasury shares): 256.5m

 

Glossary

EEMEA  Europe, Middle East and Africa, excluding EU+UK

 

CONFERENCE CALL

Patrick André (Chief Executive) and Mark Collis (Chief Financial Officer)
will be hosting a conference call with Q&A for analysts and investors at 08:00
(UK time) today.

 

To participate, please register at least 30 minutes prior to the start of the
call by following the link here
(https://registrations.events/direct/LON8439172).

A replay of the call will be available for one week, which can be accessed via
the same link above.:

 

 For further information, please contact:                                                                                        
 Shareholder/analyst enquiries:                                                                                                  
 Vesuvius plc           Patrick André, Chief Executive                                                   +44 (0) 207 822 0000    
                        Mark Collis, Chief Financial Officer Rachel Stevens, Head of Investor Relations  +44 (0) 207 822 0000    
                                                                                                          +44 (0) 7387 545 271   
 Media enquiries:                                                                                                                
 MHP Communications     Rachel Farrington, Ollie Hoare,                                                  +44 (0) 203 128 8100    

 

About Vesuvius plc

Vesuvius is a global leader in molten metal flow engineering and technology
principally serving process industries operating in challenging
high-temperature conditions.

We develop innovative and customised solutions, often used in extremely
demanding industrial environments, which enable our customers to make their
manufacturing processes safer, more efficient and more sustainable. These
include flow control solutions, advanced refractories and other consumable
products and increasingly, related technical services including data capture.

We have a worldwide presence. We serve our customers through a network of
cost-efficient manufacturing plants located close to their own facilities, and
embed our industry experts within their operations, who are all supported by
our global technology centres.

Our core competitive strengths are our market and technology leadership,
strong customer relationships, well established presence in developing markets
and our global reach, all of which facilitate the expansion of our addressable
markets.

Our ultimate goal is to create value for our customers, and to deliver
sustainable, profitable growth for our shareholders giving a superior return
on their investment whilst providing each of our employees with a safe
workplace where they are recognised, developed and properly rewarded.

We think beyond today to create solutions that will shape the future.

Forward looking statements

This announcement contains certain forward looking statements which may
include reference to one or more of the following: the Group's financial
condition, results of operations, cash flows, dividends, financing plans,
business strategies, operating efficiencies or synergies, budgets, capital and
other expenditures, competitive positions, growth opportunities for existing
products, plans and objectives of management and other matters.

Statements in this announcement that are not historical facts are hereby
identified as "forward looking statements". Such forward looking statements,
including, without limitation, those relating to the future business
prospects, revenue, working capital, liquidity, capital needs, interest costs
and income, in each case relating to Vesuvius, wherever they occur in this
announcement, are necessarily based on assumptions reflecting the views of
Vesuvius and involve a number of known and unknown risks, uncertainties and
other factors that could cause actual results, performance or achievements to
differ materially from those expressed or implied by the forward looking
statements. Such forward looking statements should, therefore, be considered
in light of various important factors that could cause actual results to
differ materially from estimates or projections contained in the forward
looking statements. These include without limitation: economic and business
cycles; the terms and conditions of Vesuvius' financing arrangements; foreign
currency rate fluctuations; competition in Vesuvius' principal markets;
acquisitions or disposals of businesses or assets; and trends in Vesuvius'
principal industries.

The foregoing list of important factors is not exhaustive. When considering
forward looking statements, careful consideration should be given to the
foregoing factors and other uncertainties and events, as well as factors
described in documents the Company files with the UK regulator from time to
time including its annual reports and accounts.

You should not place undue reliance on such forward looking statements which
speak only as of the date on which they are made. Except as required by the
Rules of the UK Listing Authority and the London Stock Exchange and applicable
law, Vesuvius undertakes no obligation to update publicly or revise any
forward looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions,
the forward looking events discussed in this announcement might not occur.

 

Vesuvius plc, 165 Fleet Street, London EC4A 2AE

Registered in England and Wales No. 8217766

LEI: 213800ORZ521W585SY02

www.vesuvius.com 

 



Copyright (c) 2024 PR Newswire Association,LLC. All Rights Reserved