TIDMVSVS
RNS Number : 3723G
Vesuvius plc
15 November 2022
15 November 2022
Vesuvius plc - Trading Update:
2022 results expected to be somewhat above expectations
Remain cautious on FY23
Future market fundamentals remain positive and medium term
growth initiatives remain on track
Vesuvius plc, a global leader in molten metal flow engineering
and technology, announces the following update covering trading in
the period 1 July to 31 October 2022.
Summary
-- End markets have been weak during the second half to date, as expected
-- Vesuvius has continued to gain market share due to
technological differentiation underpinned by R&D investment
while passing through cost inflation
-- We now anticipate 2022 performance to be somewhat above expectations
-- Inventories have started to reduce and Cash generation
remains good with year-end 2022 net debt / EBITDA ratio expected to
reduce to around 1x
-- MSCI ESG rating upgraded to AA
-- We remain cautious on FY23 with some impact from continuing
inventory reduction expected in the first half
-- Future market fundamentals remain attractive and we continue
to invest to support medium term growth
Weakening end markets
In line with expectations, steel production has been weakening
everywhere except in India which has shown moderate growth year to
date. The impact of rising energy prices is particularly impacting
European steel producers, with numerous shutdowns of blast furnaces
announced and output curtailment from electric arc furnace mills.
The impact in NAFTA is less severe to date.
While the light vehicle market is showing slight signs of
improvement from an historically low level, most other Foundry
markets are weakening, in line with the general economic
environment. This is particularly the case in EMEA where the
negative differential in energy prices with other world regions is
strongly impacting the competitiveness of the industrial
sector.
Resilient trading
Vesuvius has continued to outperform and gain market share,
thanks to the technological differentiation of our products and
solutions, resulting from our strong and continued investment into
research and development.
At the same time, we have successfully pursued the dynamic
management of our prices to compensate for the continuing increase
of our cost factors resulting from the general inflationary
environment. We have also initiated cost reduction action plans to
adapt to the economic environment and prepare for an uncertain
2023.
Medium-term growth Initiatives on track
The future market fundamentals of both our steel and foundry
markets remain positive and we continue to successfully implement
our strategic initiatives to optimally position Vesuvius to benefit
from this growth, in the medium term.
Our strategic expansions of capacity in high margin Flow Control
products to support the growth regions of Turkey, Middle East
Africa, India and South-East Asia are on track and will be fully
operational by the end of 2023. In addition, we have now broken
ground on a new Flux plant in India, which is due to be
commissioned in early 2024.
On 8 October 2022, we acquired Bayuquan Magnesium Co (BMC), a
world class basic monolithic refractory plant in China with
revenues of RMB 120 million (c. GBP14 million) in 2021. BMC has
been a long-standing manufacturing partner of Vesuvius Advanced
Refractories and in recent years has supplied us with 100% of its
production volumes. The acquisition secures strategically valuable
basic monolithic volumes at a plant which benefits from very
competitive local raw material access. It will support our further
development in China, South-East Asia and North Asia.
Working capital
Cash generation in the second half of the year to date has been
good as we continue to focus on reducing our inventory balance from
that at the half year. We expect a positive cash in-flow over the
H2 period as we progressively unwind the working capital
accumulated in H1. As a result, we expect our year-end 2022 Net
Debt / EBITDA ratio to reduce to around 1x compared to its level of
1.3x at 30 June 2022.
Sustainability progress
We are pleased to note that MSCI has upgraded our ESG rating to
AA, the second highest available rating. We are proud of our
detailed, action-oriented sustainability programme, focused on
carbon reduction for our own business and that of our customers,
alongside actions on safety and gender diversity among senior
management.
Outlook
As anticipated, both our steel and foundry end markets are
continuing to weaken in the short term. However, due to our
continuing market share gains, dynamic price management, cost
reduction actions and a more gradual unwind of inventory, we now
expect to deliver results somewhat above the analyst range of
expectations(1) for the year to 31 December 2022.
Looking to 2023, visibility remains low and the precise timing
of a return to growth is very difficult to predict. The unwind in
our own inventory levels, which is a drag on fixed cost absorption,
will continue into H1 of FY23. In this uncertain environment, we
are simultaneously preparing to reinforce our cost reduction
actions as necessary and maintaining the pace of our long-term
growth initiatives to benefit fully from the market rebound when it
materializes.
Note
(1) Company-compiled consensus for trading profit to 31 December
2022 is GBP199.7m, with a range of GBP194.0m to GBP209.4m, based on
estimates published since our HY results on 28 July 2022.
CONFERENCE CALL
Patrick André (Chief Executive) and Guy Young (Chief Financial
Officer) will be hosting a conference call 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
A replay of the call will be available for two weeks on the
following numbers:
UK Freephone: 0800 032 9687
UK Direct: 0207 136 9233
Replay Global Access URL: link here
Passcode: 97957205
For further information, please contact:
Shareholder/analyst enquiries:
Patrick André, Chief +44 (0) 207 822
Vesuvius plc Executive 0000
Guy Young, Chief Financial +44 (0) 207 822
Officer 0000
Rachel Stevens, Head of Investor +44 (0) 7387
Relations 545 271
Media enquiries:
Rachel Farrington, Ollie Hoare, +44 (0) 203 128
MHP Communications Peter Lambie 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 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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