Vesuvius (VSVS) Q3 2024 TU earnings summary

Executive summary

• Delivered robust Q3 performance with market share gains, resilient pricing, and cost reductions despite subdued steel and foundry markets, particularly outside India and EMEA.

• Achieved positive net pricing in Steel and resilient pricing in Foundry, with cost saving program ahead of plan and increased guidance for recurring cash cost savings.

• Full-year trading profit for FY24 expected to be slightly below FY23 (£189.0m vs £200.4m), maintaining return on sales margin at approximately 10.2% on a constant currency basis.

• Strong cash flow performance and significant improvement in working capital management.

• Acquisition of a 61.65% stake in Piromet AS in Turkey to strengthen presence in EMEA and robotics capabilities.

Financial highlights

• On track to reach 23% working capital to sales ratio by year-end, with GBP 90 million reduction year-over-year at end of October and average trade working capital as a percentage of revenue 90bps lower year-over-year.

• CapEx for 2024 expected at £100m, with needs to reduce from 2025 as expansion programs complete.

• Announced second tranche of GBP 50 million share buyback, to be completed within six months.

• Return on sales margin expected at 10.2% for FY24, compared to 10.4% in FY23.

• Net interest charge expected to be around £16m for FY24.

Outlook and guidance

• Steel and foundry markets expected to remain subdued for the rest of the year; cautious on timing of recovery, with improvement more likely in late 2025.

• Confident in long-term attractiveness of global steel and foundry markets, focusing on execution of self-help measures.

• Guidance for recurring cash cost savings in 2024 increased to GBP 9 million, with at least GBP 6 million additional in 2025; targeting over GBP 30 million by 2026.

• Trading profit for FY24 expected to be slightly below FY23 but in line with current market expectations.