Vesuvius scores record revenue and ups guidance

Revenue hit £897m for the six months ended 30 June, with trading profits of £99.6m as the company counteracted raw material cost inflation with sales price increases. The interim dividend was lifted 9.1% to 6p per share.

Steel volume growth in the US reached 2.8% over the period, while growth continued in Vesuvius’ “key strategic markets” with increases of 5.4% in China, 4.7% in India, 1.4% in Brazil and 4.8% in Mexico.

Over the six-month period Vesuvius, which manufactures equipment used in foundries, made some progress with the restructuring programme announced in March, to increase targeted annual savings to £22m from £15m.

Meanwhile it spent £16.8m, or 1.9% of its revenue, on R&D compared £33.2m in the entirety of 2017. Net debt at 30 June was £281.8m, a £7.5m increase from 31 December.

Chief executive Patrick André felt it was a strong first half, "delivering our best half year revenue, trading profit and return on sales since we became an independent company in 2012" with the business outperforming underlying markets thanks to the growth in demand for its "value-creating solutions, supported by our increasing investment in R&D".

"Looking beyond 2018, we believe in our ability to deliver further organic improvement in our profit margins as we implement our strategy and deliver on our restructuring programmes," he said.

Analysts from broker Numis said: "Management are 'cautiously optimistic' for the second half suggesting that trading profit will now be marginally above current consensus guidance of £189m. Steel end markets are expected to remain positive and North American steel tariffs not a concern as should boost US volumes where Vesuvius has good market shares."

Vesuvius’ shares were up 7.73% at 627.00p at 1013 BST.