RHI Magnesita (RHIM) Q3 2024 TU earnings summary

Executive summary

• Sales volumes and pricing were weaker than expected due to a prolonged global industrial downturn, with India as the only region showing modest growth.

• Revenues for the nine months to September 2024 were flat year-over-year, with M&A offsetting lower pricing and volumes.

• Margins were maintained above 11% through price discipline, cost reduction, and efficiency improvements, with Q3 adjusted EBITA margin slightly above full-year guidance.

• Long-term structural improvements are underway, including digital upgrades, ERP implementation, business process outsourcing, and expansion of the solutions business.

• Customer satisfaction metrics, including net promoter scores and PIFOT, reached record highs in Q3.

Financial highlights

• Adjusted EBITA for Q3 was similar to previous quarters, with 2024 guidance revised to €400–€410 million, below consensus of €413 million.

• Adjusted EPS is expected to be in line with consensus at approximately €5 per share, aided by FX gains.

• Cash conversion remained strong, close to 100% year-to-date, with working capital intensity expected to fall to 24% by year-end.

• Net debt and gearing are stable, expected to remain within the 2–2.5x EBITA range at year-end.

• Year-to-date pricing declined 4%, in line with guidance for up to a 5% drop in 2024.

Outlook and guidance

• No recovery is expected in the near term; pricing pressure and structural oversupply in global steel markets are likely to persist into 2025.

• Q4 is expected to benefit from seasonality in cement and project deliveries, but customer postponements could shift orders into Q1 2025.

• 2024 sales volumes are now expected to be about 5% higher year-over-year, including M&A, with a slight decline in the base business.

• India’s production growth is expected to remain at 3–4% due to Chinese import pressure, below previous expectations of 5–6%.

• The group remains positioned for upside if customer production volumes recover, leveraging operational gearing.