(Alliance News) - Vesuvius PLC on Thursday said it aims to generate total free cash flow of at least GBP400 million in the coming three years to put towards dividends, buybacks and M&A activity.
The molten metal flow engineering firm, ahead of a capital markets day in London, said it is eyeing a revenue outperformance of at least 2% compared to the market. This will be "driven by market share gains and superior pricing", Vesuvius said.
It is aiming for a return on sales margin of at least 12.5% in 2026, helped by GBP30 million worth of cost cuts. It achieved a return on sales margin of 11.1% in 2022.
In addition, Vesuvius aims to generate at least GBP400 million worth of free cash flow between 2024 and 2026. This will go towards "dividends, acquisitions and share buybacks". In 2022, it achieved GBP123 million worth of free cash flow, but suffered a GBP300,000 outflow in 2021.
Vesuvius added: "The [capital markets day] will provide insights into the positive long-term growth trends in the steel and foundry markets, in particular the positive inflexion of the steel markets ex China to structural growth in the coming years, and how Vesuvius' strategy of technological differentiation enables outperformance of these markets.
On Tuesday, the company said it continued to perform "robustly" but noted a "gradual deterioration" in a key market.
The London-based firm said in its Foundry unit, it has seen a "general slowdown" outside of India in the four months to October 31. The firm's financial year runs to December 31.
"We have seen a gradual deterioration in most Foundry end markets outside of India, particularly in Northern Europe. Steel production levels outside of India have weakened relative to H1 in EMEA, South-East Asia and South America," Vesuvius said.
The unit provides foundry consumables services, aiming to reduce casting defects. It offers binders, lining systems and coatings.
Shares in the company traded 0.7% lower at 406.60 pence each in London on Thursday morning.
By Eric Cunha, Alliance News news editor
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Vesuvius (VSVS)