Vesuvius posts weaker earnings amid depressed metals markets

The FTSE 250 molten metal flow engineering firm saw revenue dip 8.5% during the calendar year, to £1.32bn, from £1.44bn. Trading profit was down 13.1% to £124m, and the company's return on sales reduced 50 basis points to 9.4%.

Headline earnings were down 16.2% to £75.7m, and earnings per share dropped 16% to 28.1p, from 33.4p.

Vesuvius' board said the lower revenues and profits were in line with previous guidance, and reflected weakness in the global steel and foundry markets.

It said there was a margin improvement in foundry, from self-help measures undertaken by new management.
There was also continued outperformance in the firm's strategic growth areas of India, China and South America.

"These results reflect the substantial headwinds that we have faced in our key end-markets of steel and foundry," said chief executive François Wanecq.

"We have been able to minimise the impact on our margins due to a continued focus on self-help measures and our substantial restructuring programme launched in response to the permanent structural changes in the end-markets," he added.

Vesuvius initiated a restructure in the second quarter to address structural changes in end markets, with further actions identified to respond to those ongoing changes.

The board said total annual savings of £20m were expected towards the end of 2017, of which £8.8m was delivered in 2015.

Its cash conversion ration in 2015 was 100.3%. Net debt increased 8.7% to £291.6m, with the company putting that down to the £23.8m acquisition of Sidermes in the first half, and an £11.5m cash spend on the first phase of restructuring.

Vesuvius' board maintained its final dividend of 11.125p per share, taking the total dividend for the year to 16.275p, an increase of 0.9%.

"We expect the underlying trading environment in the current year to be broadly similar to that experienced in the second half of 2015 and have initiated a further cost reduction plan, which, together with the actions already taken will deliver full year savings of £20m towards the end of 2017, an increase of £10m over the savings already announced," Wanecq explained.

He said that, despite current challenges, the company's strategy for longer-term profitable growth remained unchanged and it had made encouraging progress in 2015.

"We have strengthened our competitive position in the strategically important markets of China, India and South America through increasing penetration of our value added products, and continuing to develop our Technical Services offering."

At 1150 GMT, shares in Vesuvius were up 0.52% to 325.7p.