TIDMRHIM
RNS Number : 7753R
RHI Magnesita N.V.
31 October 2023
RHI Magnesita N.V.
("RHI Magnesita" the "Company" or the "Group")
Q3 2023 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 30 September 2023
('Q3').
Q3 trading
Adjusted EBITA in the third quarter was at a similar level to
that achieved in Q1 and Q2, as resilient pricing, the benefits of
strategic initiatives and M&A offset lower sales volumes and
under-absorption of fixed costs. The Group has also achieved a
consistent improvement in its operating KPIs in the year to date,
leading to improved customer service levels and more effective cost
management.
Volume performance in Q3 reflected normal seasonal factors, with
plants operating at an average of 70% of capacity, and was
consistent with the expectation underpinning previous guidance for
full year sales volumes (pre M&A) to be up to 5% below 2022.
Steel volume weakness was most pronounced in Europe, China and
South America, reflecting local market conditions.
Pricing was strongest in the cement & lime and nonferrous
metals segments within the Industrials business, due to the later
cycle nature of these customer industries. Refractory raw material
prices moved lower in Q3, indicating potential for finished goods
pricing pressure in Q4.
The Group's EBITA margin in Q3 reduced slightly to 11.2%, from
11.6% in H1 2023. Refractory margin remained strong with a
relatively low contribution from vertical integration at 1.8%, as
guided.
Financial position
The Group continued to generate strong organic operating cash
flows from its base business before M&A with YTD cash
conversion increasing to over 120% due to further release of
working capital.
M&A has increased net debt by approximately EUR430 million
in the year to date, including working capital, assumed net debt
and the P-D Refractories transaction completed in October.
Acquisitions in India were partially funded by the issuance of 27
million shares in RHI Magnesita India Limited to the sellers of
Dalmia OCL and a Qualified Institutional Placement raising EUR100
million in April 2023. The Group's gearing measured as a ratio of
net debt to EBITDA is expected to increase modestly by the year
end, but to remain in line with the target range of 2.0-2.5x.
M&A update
On 3 October 2023, the Group completed its acquisition of P-D
Refractories, a European producer of high quality alumina-based
refractories for industrial applications in process industries,
with revenues of EUR171 million in the year to 31 December 2022.
The transaction is not expected to result in a material increase in
gearing for the Group on a pro forma EBITDA basis.
The Group has now completed a total of nine acquisitions in the
last 24 months, as it executes on its strategy to consolidate small
and medium sized businesses in its target geographies and product
segments.
Outlook
Order book visibility is at normal levels with limited signs of
a recovery in demand volumes in 2024, as global construction
activity continues to be weak and demand in the autos market
remains below pre-pandemic levels.
However, following good execution, the strong EBITA delivered in
the third quarter, outperformance in the delivery of M&A
synergies in the year to date and seasonally higher volumes in
cement and lime anticipated in Q4, Adjusted EBITA guidance for the
full year is increased from EUR360 million to at least EUR380
million. The benefits from M&A and operational efficiencies
will support earnings into 2024, offsetting weak demand.
Net financial expenses excluding foreign exchange related items
are tracking in line with guidance of c.EUR65 million for 2023.
Taking into account the higher EBITA forecast offset by higher
financial expenses and foreign exchange adjustments in the year to
date, EPS is expected to be moderately ahead of analyst consensus
for the full year.
Stefan Borgas, Chief Executive Officer, said: "I am pleased by
the strong execution demonstrated by RHI Magnesita during difficult
conditions for our key end markets. We are currently benefitting
from the strategic investments we have made in reducing our cost
base and rationalizing our production network, together with
improved planning and careful management of our assets through this
period of weaker demand. Pricing discipline has helped to maintain
EBITA margins at over 11%, offsetting the impact of lower
production on our fixed cost base. We have also been able to
progress our M&A strategy, with six acquisitions completed in
the first nine months of 2023 and a total of nine in the last 24
months. As a result of success in the early stages of M&A
integration and our consistent operational and financial delivery
in the year to date, we are able to increase our EBITA guidance for
2023 to at least EUR380 million."
Conference Call
A conference call will be hosted at 8:15am UK time to discuss
the trading update:
Dial in +44 207 107 0613
Access code 42809281
Webcast and playback LINK
facility
For further enquiries, please contact:
Chris Bucknall, Head of Investor Relations
Tel +43 699 1870 6490
E--mail: chris.bucknall@rhimagnesita.com
Media:
Hudson Sandler
Mark Garraway, Emily Dillon, Nick Moore
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 1,200degC 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 15,000
employees in 47 production sites, 7 recycling facilities and more
than 70 sales offices. RHI Magnesita intends to build on its
leadership in revenue, scale, product portfolio and diversified
geographic presence to expand further in high growth markets.
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 Vienna Stock
Exchange (Wiener Börse). For more information please visit:
www.rhimagnesita.com
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END
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