RHI Magnesita (RHIM) Q3 2024 TU earnings summary

Executive summary

• Sales volumes and pricing were weaker than expected amid a tough global industrial downturn, with no signs of recovery yet visible outside India.

• Revenues for the nine months to September 2024 were flat year-over-year, with M&A offsetting lower pricing and volumes.

• Margins remained strong due to price discipline, cost reduction, and efficiency improvements, with Q3 adjusted EBITA margin slightly above the 11.0% full-year guidance.

• Long-term structural improvements are underway, including digital upgrades, ERP implementation, business process outsourcing, and a broader solutions offering.

• The 4PRO offering, focused on advanced, sustainable, and digitalized solutions, is gaining traction globally.

Financial highlights

• Adjusted EBITA for 2024 is expected between €400 million and €410 million, below consensus of €413 million, assuming no further Q4 delivery delays.

• Adjusted EPS for 2024 is expected to align with consensus at approximately €5 per share, aided by FX gains.

• Year-to-date pricing declined 4%, with steel segment down 5% and industrial down 2%, in line with guidance for up to a 5% drop.

• Cash conversion remained strong at 96% year-to-date, close to 100% but slightly below H1 due to inventory buildup.

• Working capital intensity at 26% in Q3, targeted to fall to 24% by year-end.

Outlook and guidance

• No recovery expected in the near term; pricing pressure likely to persist into 2025, with structural oversupply in global steel markets.

• Q4 uplift anticipated from cement seasonality and project deliveries, but risk of order postponements exists.

• 2024 sales volumes are now expected to be about 5% higher year-over-year, including M&A, with a slight decline in the base business.

• The group remains positioned for upside if customer production volumes recover, leveraging operational gearing.