Vesuvius FY results seen 'somewhat above expectations'

Materials engineering company Vesuvius said on Tuesday that its full-year results were expected to be "somewhat above expectations" as it continued to "outperform" and gain market share.

Vesuvius said it had gained market share due to its "technological differentiation" underpinned by research and development investment while passing through cost inflation.

The FTSE 250-listed group noted that inventories had started to reduce and cash generation remained "good", with its year-end 2022 net debt/underlying earnings ratio expected to reduce to around 1.0x.

Vesuvius added that it remains "cautious" on the coming 2023 trading year, with some impact from continuing inventory reduction expected in the first half, and acknowledged that end markets had been "weak" so far in the second half as steel production weakened everywhere, except in India.

However, Vesuvius also highlighted that future market fundamentals remained "attractive" and that it was continuing to make investments in order to support medium-term growth.

"Looking to 2023, visibility remains low and the precise timing of a return to growth is very difficult to predict. The unwind in our own inventory levels, which is a drag on fixed cost absorption, will continue into H1 of FY23. In this uncertain environment, we are simultaneously preparing to reinforce our cost reduction actions as necessary and maintaining the pace of our long-term growth initiatives to benefit fully from the market rebound when it materialises," said Vesuvius.

As of 0900 GMT, Vesuvius shares were down 0.17% at 388.73p.

Reporting by Iain Gilbert at Sharecast.com