Vesuvius (VSVS) Trading update summary

Market trends and performance

• Steel markets outside China, Russia, Iran, and Ukraine grew 2.5% in Q1, accelerating to 2.9% by April, with positive momentum expected to continue and North American production rising 3.5% year-on-year in the first four months.

• Foundry markets remained stable overall, with India and China performing well, while other regions stayed soft.

• European steel market is improving faster than anticipated, aided by new quota systems effective from July, and customers are ramping up production in anticipation.

• Foundry market in North America may improve due to new protectionist measures, while Europe and South America remain open to imports.

• Steel division volumes were slightly lower due to customer closures in 2025 and supply chain issues in North America.

Operational and financial updates

• Pricing discipline and positive pricing developments offset cost base increases in both steel and foundry divisions.

• Operational issues in North America, mainly due to faulty raw materials, caused a temporary but non-recoverable loss of production and a one-off negative trading profit impact.

• Cost reduction program is on track, targeting at least GBP 10 million recurring net cash savings in 2026 and GBP 55 million by 2028.

• Integration of the Morgan Advanced Materials division (MMS) is progressing smoothly, delivering expected synergies and supporting performance.

• Leverage remains stable and is expected to decline in the second half of the year due to improved earnings and cash generation.

Guidance and outlook

• Full-year guidance remains unchanged despite operational setbacks, supported by positive market trends and recovery plans, with stronger H2 performance expected.

• FX headwind increased to GBP 5 million, supply chain issues cost GBP 4 million in H1, but recovery is expected through price or volume.

• Variable compensation reinstatement adds to H1/H2 weighting, with GBP 4.5 million accrued in H1.

• FY25 revenue and trading profit were slightly lower when re-translated at 2026 FX rates, but return on sales remained above 8%.

• All other technical guidance items from March 2026 remain unchanged.