Vesuvius to be hit by falling graphite demand, says Panmure

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Sharecast News | 04 Nov, 2015

Updated : 16:37

Broker Panmure Gordon warned that FTSE 250-listed Vesuvius is likely to be hit by the same industry pressures as German rival SGL Carbon, which issued a profit warning on Tuesday.

SGL Carbon warned that, despite its cost-cutting efforts, it expects group profit to decline significantly in 2016 due to renewed pressure on prices in the graphite electrode market.

"It appears that steel customers are starting to reduce and/or postpone their demand for graphite electrodes already for first quarter of 2016," Panmure said.

Analysts expect Vesuvius to face similar pressures, particularly from its US and European customers, some of whom are having to close plants.

Panmure believes the consensus EPS forecast of 30.6p and 31.2p for 2015 and 2016 remains "too high" and expects pressure on revenues and margins particularly in 2016.

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