Vesuvius revenues fall as end markets deteriorate

Profit and revenue at molten metal flow engineer Vesuvius fell in the year to the end of December 2019 amid a "significant" deterioration in its main end markets of steel and foundry after a strong 2018.

Pre-tax profit slumped 24.1% to £118.6m on revenue of £1.7bn, down 4.9% on the year.

In the steel division, revenue fell 3.3% to £1.2bn as markets deteriorated in the majority of regions after a strong 2018. Vesuvius said the 'high technology' segment of the steel market, key for the flow control business unit, suffered proportionately more in 2019 than the more commoditised construction steel market, mainly due to weakness in light vehicle volumes. This deterioration of its markets was exacerbated by a general de-stocking throughout the supply chain, particularly in EMEA.

In the foundry business, the environment was "challenging", it said, with weakness in light vehicle production in all regions. Revenue in that segment fell 8.2% to £515.1m on a reported basis, with underlying revenue down 8.7%.

Chief executive Patrick Andre said the company had delivered a "robust" operational performance in "challenging" conditions.

"Key end markets were especially weak during the fourth quarter of 2019 and we expect this abnormally low level of activity to continue at least in Q1 2020 and to weigh on performance in H1 2020," he said.

He said the potential impact of the coronavirus crisis is difficult to assess currently but it is likely to have "a temporary negative impact" on its end markets.

"However, there are some signals indicating that the destocking phase experienced in H2 2019 is maturing and may shortly be coming to an end," said Andre. "Thanks to our restructuring efforts, our reinforced emphasis on innovation in the service of our customers and our dedicated workforce, Vesuvius is ideally positioned to benefit from the normalisation in our end markets as this occurs."

At 1130 GMT, the shares were down 0.6% at 408.80p.