TIDMVSVS
RNS Number : 3782W
Vesuvius plc
14 November 2017
14 November 2017
Vesuvius plc
Third Quarter 2017 Trading Update
Vesuvius plc, a global leader in molten metal flow engineering,
releases the following Trading Update covering trading in the
period from 1 July to 30 September 2017.
SUMMARY & OUTLOOK
Since the announcement of our 2017 Half Year results in July,
global steel production growth has exceeded our expectations and
overall our sales growth has continued to outperform the global
steel market. At the same time, we continue to experience headwinds
related to rising raw material prices and inter-company imports
required by Flow Control in Europe. As a result, our Trading Profit
expectation for full year 2017 remains unchanged.
Looking ahead, the growth in steel volumes implies positive
prospects for Trading Profit growth during 2018, when we expect the
headwinds of increased raw material cost and European Flow Control
supply to have been substantially mitigated.
BOARD & SENIOR MANAGEMENT
As previously announced, Patrick André was appointed Chief
Executive and Executive Director of Vesuvius plc with effect from 1
September 2017. Patrick replaced François Wanecq, who retired from
the Board of Directors on 31 August 2017 but will remain with the
Group until 31 December 2017 to assist with the transition of
responsibilities.
On 1 October 2017, Roel van der Sluis, previously President,
Vesuvius North Asia, assumed the position of President, Steel Flow
Control for the Group, succeeding Patrick André. Roel continues to
serve on the Group Executive Committee in his new role.
TRADING
In Q3 2017, we have benefitted from 6.7% year-on-year growth in
global steel production, as reported by the World Steel
Association. In the year-to-date, steel volume growth of 5.6% has
exceeded market expectations, resulting in the World Steel
Association's recent upward revision of their demand growth
forecasts for full-year 2017, from 1.3% to 2.8%. In Foundry, the
market environment remains broadly positive across the majority of
our end markets and the expected seasonality in sales in the second
half has been confirmed.
RAW MATERIALS
As noted in our 2017 Half Year results, we started to experience
significant price increases towards the end of the first half for
several raw materials. The severity and repetitive nature of
monthly increases since then have been greater than expected and
are affecting several more of our key raw materials. Whilst our
Advanced Refractories business has been most affected by these
increases, we remain confident in our ability over time to recover
all cost inflation through higher selling prices.
FLOW CONTROL EUROPE
As in H1 2017, we continue to rely on inter-company imports to
meet growth in European Flow Control demand, which, as a region,
has represented a significant proportion of the higher sales in the
year to date. These inter-company imports have a higher cost base
due to freight, overtime and export duties. The process of
ramping-up European capacity so that reliance on these imports can
be reduced remains on track, but is unlikely to have a material
impact on reducing costs until late in Q4 2017.
RESTRUCTURING
We continue to make progress in the delivery of our
restructuring programme. As reported previously, the incremental
savings in H2 2017 will be relatively small, with almost all of the
additional GBP20m of annual targeted savings announced in May and
July 2017 due to be delivered in 2018-2020.
FOREIGN EXCHANGE
Average exchange rates of Sterling to US Dollar and Euro have
fallen by 6.1% and 6.4%, respectively, between FY 2016 and the
first nine months of 2017. This has provided a trading profit
benefit of approximately GBP7.6m year to date. Assuming current
foreign exchange rates continue, the estimated benefit would
increase to GBP8.4m for the full year.
FINANCIAL POSITION
Our Net Debt / EBITDA ratio was 1.4x at 30 September, down from
1.6x at 30 June 2017.
WORKING CAPITAL
Despite the continued increase in sales, we have successfully
reduced working capital in absolute terms, as a result of ongoing
optimisation initiatives and a decline in the excess inventories
built up in late 2016 related to closure of the Italian plants.
Working capital as a percentage of sales improved to 25.8% at 30
September, down from 26.2% at 30 June.
CONFERENCE CALL
Patrick André (Chief Executive) and Guy Young (Chief Financial
Officer) will be hosting a conference call for analysts and
investors at 08.30 (UK time) today (14 November).
To join the call, please use the dial in number below:
Conference call:
+44 (0)33 0336 9105 all participants
Confirmation code: 4836301
A replay of the call will be available approximately one hour
after the event for two weeks on the following number:
Replay:
+44 (0)20 7984 7568 non-US participants
+1 719 457 0820 US participants
Confirmation code: 4836301
FUTURE EVENTS
Vesuvius' preliminary results for the year ending 31 December
2017 are expected to be announced on Thursday, 1 March 2018.
For further information please contact:
Shareholder/analyst enquiries:
Vesuvius plc Patrick André, Chief Executive
+44 (0) 207 822 0000
Guy Young, Chief Financial Officer +44 (0) 207 822 0000
Euan Drysdale, Group Head of Corporate Finance +44 (0) 207 822 0027
Virginia Skroski, Investor Relations Manager +44 (0) 207 822 0016
Media enquiries:
MHP Communications Andrew Jaques/James White/Ollie Hoare +44 (0)
203 128 8100
About Vesuvius plc
Vesuvius is a global leader in molten metal flow engineering
principally serving the steel and foundry industries.
We develop innovative and customised solutions, often used in
extremely demanding industrial environments, which enable our
customers to improve their manufacturing processes, enhance product
quality and reduce energy consumption. 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 low-cost 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 he or she is recognised,
developed and properly rewarded.
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
www.vesuvius.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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