Vesuvius (VSVS) Q3 2024 TU earnings summary

Executive summary

• Delivered robust Q3 performance with market share gains and resilient pricing, despite subdued steel and foundry markets outside India and EMEA/EEMEA, particularly in EU27+UK.

• Cost-saving initiatives are ahead of plan, with increased guidance for recurring cash cost savings and a three-year programme targeting at least £30m by 2026.

• Completed acquisition of a 61.65% stake in Piromet AS in Turkey for €26.2m, enhancing presence in EEMEA and robotics capabilities; completion expected Q1 FY25.

• Announced a second tranche of share buyback worth GBP 50 million, to be completed within six months, reflecting strong balance sheet and confidence in free cash flow.

• Trading profit for FY24 expected to be slightly below FY23, maintaining return on sales margin at approximately 10.2% on a constant currency basis.

Financial highlights

• Trading profit for FY24 anticipated to be slightly below FY23 (£189.0m vs £200.4m in FY23) on a constant currency basis.

• Return on sales margin expected to remain resilient at 10.2% for FY24.

• Strong cash flow performance, with working capital to sales ratio targeted at 23% by year-end; average trade working capital at end-October 2024 was 90bps lower year-over-year.

• Capex (excluding leases) for 2024 expected to be around £100m.

• Working capital at end of October was GBP 90 million below prior year.

Outlook and guidance

• Steel and foundry markets expected to remain subdued for the rest of the year; recovery not anticipated until late 2025.

• Confident in long-term market attractiveness and well-positioned for eventual recovery, with focus on self-help measures.

• Recurring cash cost savings guidance raised to GBP 9 million for 2024, with at least GBP 6 million more in 2025; targeting over GBP 30 million by 2026.