TIDMVSVS
RNS Number : 8546L
Vesuvius plc
18 May 2022
18 May 2022
AGM Trading Update
Strong start to the year despite softer end markets
Vesuvius plc ("Vesuvius", the "Group"), a global leader in
molten metal flow engineering, releases the following Trading
Update in conjunction with its Annual General Meeting being held
today.
TRADING
Our sales performance in the first four months of 2022 was
stronger than expected.
Positive volume growth in our Steel division was supported by
market share gains, particularly in Flow Control, across all key
regions. Foundry division volumes were broadly in-line with the
equivalent period of 2021 as we experienced continued weakness in
automotive end markets.
In parallel, our active management of selling prices has
successfully offset all cost inflation to date. As a consequence of
this positive volume and pricing environment, our trading profit in
the first four months of 2022 increased by more than 60% on a
constant currency basis relative to both the equivalent period at
the start of 2021 and the last four months of 2021. Our
Return-on-Sales also improved materially.
The integration of the Universal Refractories business is
proceeding as planned, with performance marginally ahead of our
expectations set at the time of the acquisition in December
2021.
In line with the position set out at our 2021 full year results,
we have ceased trading with all sanctioned customers in Russia. We
are in the process of winding down remaining contractual
obligations with other customers in the country. We will review our
position on this latter point at mid-year based on the evolution of
the conflict and an assessment of the effectiveness of these
measures.
MARKETS
Steel production in Q1 2022 decreased by 2.2% compared to Q1
2021 in the world excluding China, which accounts for approximately
90% of our sales, as reported by the World Steel Association. This
reflects a broad-based weakening across all regions, except for
India, South East Asia and Mexico. EMEA was especially weak in Q1
2022 with production down 5.1%. In relation to our foundry markets,
global light vehicle and heavy commercial vehicle production have
decreased by 4.9% and 30.3%, respectively, compared to Q1 2021, as
reported by IHS.
EXPANSION OF FLOW CONTROL CAPACITY
Our GBP28m investments in Flow Control, focused on expanding
capacity to support growth and continuous market share gains in
some of our most profitable product lines to serve the fast-growing
EEMEA(1) , Indian and South-East Asian markets, are on-track and
expected to be operational from late 2022.
WORKING CAPITAL
As indicated at the announcement of our 2021 full year results,
we have continued to see working capital growth in early 2022 due
to higher business activity and our decision during 2021 to
build-up raw material inventory to counteract the risk of supply
chain disruption and ensure customer deliveries. A reduction of
working capital is contingent on an improved supply chain, which is
not expected until late in 2022 or early 2023.
FINANCIAL POSITION
Our balance sheet remains strong and as a result of the robust
performance in the first four months of the year we expect leverage
at the half-year to remain largely unchanged versus year-end 2021,
despite the impact on net debt from increased working capital. We
expect leverage to decline in the second half of the year.
FOREIGN EXCHANGE
The implied impact on our expected 2022 results of average Q1
2022 exchange rates, when compared to average 2021 FX rates, is a
tailwind of 1.5% on our expected 2022 Trading Profit.
OUTLOOK
The global macro-economic outlook has weakened since the start
of the year due to geo-political uncertainty, Covid-related
restrictions in China and the prospect of increasing interest rates
to combat inflation. The latest World Steel Association forecasts
for steel production growth in the world excluding China have been
lowered to 0.7% from 4.7%. A similar downward revision has been
made by IHS to automotive and heavy vehicle production forecasts
which have been lowered to +4.4% and -8.4% from 9.0% and -4.8%,
respectively.
However, despite this weakening economic environment, our
expectations for the Group performance for the full year remain
unchanged given the strong start to the year and our proven ability
to actively manage cost pass through with pricing.
(1) Eastern Europe, Middle-East and Africa.
CONFERENCE CALL
Patrick André (Chief Executive) and Guy Young (Chief Financial
Officer) will be hosting a conference call for analysts and
investors at 09:00 (UK time) today (18 May).
To participate, please register at least 30 minutes prior to the
start of the call by logging on to:
https://cossprereg.btci.com/prereg/key.process?key=PTWJR8PAN
A replay of the call will be available approximately one hour
after the event for two weeks on the following number:
Replay:
UK Freephone: 0800 032 9687
UK Direct: 0207 136 9233
Replay Global Access URL:
http://www.conferencingsupport.com/globalaccess/?bid=00&itfn=1&ddi=1&ref
Passcode: 46400226
For further information, please contact:
Shareholder/analyst
enquiries:
+44 (0) 207 822
Vesuvius plc Patrick André, Chief Executive 0000
+44 (0) 207 822
Guy Young, Chief Financial Officer 0000
Euan Drysdale, Group Head of Corporate +44 (0) 7584
Finance 641 315
Media enquiries:
Andrew Jaques/ Rachel Farrington/Peter +44 (0) 203 128
MHP Communications Lambie 8570
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 for everyone.
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
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END
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