RHI Magnesita reports subdued Q1, but outlook unchanged

The company, which produces refractory products for high-temperature industrial processes, said continuing weakness in key end markets of construction and transportation led to weaker sales volumes and lower pricing as expected, offset by the impact of M&A. However, EBITA margins were in line with full-year guidance at around 11%.

In response to cyclically weaker demand, RHI Magnesita said it continues to manage key operational and commercial disciplines closely, including pricing, costs, production planning, inventories and customer credit exposures.

"Low plant utilisation and consequent under-absorption of fixed costs create favourable conditions to increase output into a recovery, with significant operational gearing benefits to be realised once customer demand returns. The timing of such recovery remains uncertain and is not yet evident in customer behaviour."

Weaker volumes and pricing in the industrial segment, against strong comparatives last year, are expected to be offset by growth in steel production in markets (excluding China) in 2024.

The company, which in March announced the $430m acquisition of Resco Group, a US-based producer of alumina monolithics to grow its production footprint in North America, has now made 10 acquisitions since December 2021.

Chief executive Stefan Borgas said it was the company's strategic priority to "grow through consolidation in the fragmented global refractory industry".

"Our broad addressable market extends to all high temperature iron, steel and industrial processes and we have expanded our business via a counter-cyclical M&A programme in alumina-based refractories, industrial market segments and other product areas and geographies where we have previously been under-represented," he said.

The stock was more or less flat on Thursday morning at 3,617.75p.