RHI Magnesita (RHIM) H1 2024 earnings summary

Executive summary

• Revenue was stable at €1,728 million, as M&A offset a 3% decline in sales volumes and 4% lower pricing, with demand subdued except India.

• Adjusted EBITA declined 5% to €190 million, margin at 11.0%, with strong cash conversion at 123%.

• Adjusted EPS rose 2% to €2.59, supported by FX gains and lower finance charges.

• M&A activity continues to drive growth, with 10 acquisitions since Dec 2021 and Resco Group acquisition pending.

• Fatal safety incident in China prompted a global safety review.

Financial highlights

• Revenue: €1,728 million (flat year-over-year); Adjusted EBITA: €190 million (down 5%); Adjusted EPS: €2.59 (up 2%).

• Adjusted EBITA margin: 11.0% (down 60bps); gross margin improved to 24.1%.

• Record operating cash flow of €233 million, with cash conversion at 123% of EBITA.

• Dividend per share increased to €0.60 (+9% YoY), in line with policy.

• Net debt: €1,274 million; liquidity: €1,405 million.

Outlook and guidance

• Full-year adjusted EBITA guidance of at least €410 million reaffirmed, with H2 expected to benefit from seasonality and delayed project deliveries.

• No material recovery in market-driven demand expected in H2 2024; volume growth to come from project deliveries and seasonality.

• Working capital intensity targeted at ~24% for the full year.

• Capex guidance for 2024 revised down to €135 million due to digital spend reclassification.

• Net debt to pro forma adjusted EBITDA expected to remain within 2.0–2.5x for periods of compelling M&A.