Vesuvius cautiously optimistic for 2017 after strong start

Vesuvius said it was "cautiously optimistic" about its likely trading performance in 2017 after a "strong" first quarter, with the weak pound continuing to provide a tailwind.

Without giving any precise details on revenue or profit, the molten metal engineer said the encouraging early trend of an improved global market environment that it highlighted in March has continued across its major regions had resulted in a "strong Q1 2017 in comparison to a relatively weak Q1 2016".

Vesuvius benefitted from the 5.7% year-on-year growth in global steel production in the first quarter, though it comes off a relatively low base a year ago and the full 2017 growth expectations for the market are materially lower than this figure.

In the foundry business, the market environment is "mixed", with light vehicles slowing in the USA and static in the rest of the world, while heavy truck and mining sales were showing "slight signs of recovery but this varies by region".

The restructuring programme continues, with management increasing by £5m the total targeted savings of the current restructuring programme to £40m from £35m, with no extra cost on top of the £45m previously guided.

The benefit of this additional £5m saving is expected to begin in the final quarter of the year, so the impact in 2017 will be limited. The total targeted annual savings now stand at £40m, up from £35m.

"We continue to assess restructuring opportunities across our businesses which could potentially yield further savings in the future," the company said.

The quarter saw a £2.8m benefit from foreign exchange and, all things being equal, trading profits from last year would be lifted 7% if average exchange rates in the first quarter continue for the whole of 2017.