Vesuvius Regulatory News (VSVS)

11 November 2021

Vesuvius plc

Trading Update

Vesuvius plc, a global leader in molten metal flow engineering and technology, announces the following update covering trading in the period 1 July to 31 October 2021.

END MARKETS

Steel production and demand remains strong across all our key markets, with the exception of China, which has recently experienced significant month-on-month production declines due to state intervention to reduce production and restrictions on power usage.

Foundry end-markets across most regions also remain strong, with the exception of the automotive industry, where, despite robust demand, production growth has significantly underperformed expectations earlier in the year due to the continued global shortage of semi-conductors, as well as broader supply chain difficulties. These challenges are now expected to persist well into 2022 with automotive market production forecasts revised materially downwards as a result.

PRICE INCREASES SUCCESSFULLY OFFSETTING COST INFLATION

We have successfully implemented price increases during 2021, in order to offset the ongoing impact of much higher freight and raw material costs, which have continued to increase in recent months. Whilst the inevitable lag between cost and selling price increases has negatively impacted year to date profit margins, at current raw material and freight costs the selling price increases we have achieved will offset all of the cost increases incurred and restore margins as from year end.

We remain confident that if costs increase further, we will be able to institute additional price rises to offset any adverse impact to our results.

GROWTH INITIATIVES ON TRACK

We have continued to launch new products, supporting both our ambitions to gain market share and our margin improvement objectives. We remain on track to increase the number of new product launches in Q4 as access to customers improves and travel becomes less restricted.

The expansion of our Steel Flow Control capacity, announced at the time of our half year results, is progressing well and is on track to support growth and market share gains in the fast-growing markets of EEMEA, India and South East Asia.

WORKING CAPITAL

As indicated in our half year results, in recent months we have increased our inventory, particularly in raw materials and certain finished goods, to mitigate against the risk of supply disruption to our customers.

Despite this investment in inventory, we still expect to finish the year with a materially better working capital to sales ratio than in the prior year.

FINANCIAL POSITION

We expect our year-end 2021 Net Debt / LTM EBITDA ratio to be broadly in-line with its level of 1.1x at 30 June 2021, due to the short-term investment in working capital and payment of the interim dividend.

SUSTAINABILITY PROGRESS

Further progress has been made in converting our sites to renewable electricity, with contracts now in place across 11 sites. Plans to extend this further are in place for Q4 and 2022.

In addition to the upgraded MSCI ESG rating of 'A' received in June 2021, EcoVadis recently graded our ESG status at a "Gold" level, placing Vesuvius in the top 5% of companies that they assess.

OUTLOOK

Revenue growth to October was broadly in line with our expectations, despite the recent weakening in auto end markets and slowing steel production in China. Ongoing raw material price and freight cost increases experienced to date have had some adverse impact on margins. In response, we have successfully negotiated selling price increases which at current cost levels will restore margins as from year end. Consequently, we expect Group trading profit (EBITA(1)) for 2021 to be in line with current analyst expectations(2), albeit towards the lower end of the range.

The demand dynamics for both steel and foundry end markets remain positive and looking beyond the ongoing transition period of the pandemic recovery, we expect continuing structural growth in our end markets of steel and foundry to present attractive organic growth opportunities, supported by the strategic expansion of our Steel Flow Control production capacities in Asia and EMEA.

 Notes:

(1) Excludes separately reported items.

(2) The range of analyst forecasts as at 10 November for 2021 Trading Profit (EBITA(1)) is between £137m and £147m, based on estimates compiled by Vesuvius.

CONFERENCE CALL

Patrick André (Chief Executive) and Guy Young (Chief Financial Officer) will be hosting a conference call for analysts and investors at 11:00 (UK time) today (11 November).

To participate, please register at least 30 minutes prior to the start of the call by logging on to: https://cossprereg.btci.com/prereg/key.process?key=PXQFLAWEM 

A replay of the call will be available for two weeks on the following numbers:

UK Freephone: 0800 032 9687

UK Direct: 0207 136 9233

Replay Global Access URL: http://www.conferencingsupport.com/globalaccess/?bid=00&itfn=1&ddi=1&ref

Passcode: 70895529

 About Vesuvius plc

Vesuvius is a global leader in molten metal flow engineering and technology principally serving the steel and foundry industries.

We develop innovative and customised solutions, often used in extremely demanding industrial environments, which enable our customers to improve their manufacturing processes, enhance product quality and reduce costs. These include flow control solutions, advanced refractories and other consumable products and increasingly, related technical services including data capture.

We have a worldwide presence. We serve our customers through a network of low-cost manufacturing plants located close to their own facilities, and embed our industry experts within their operations, who are all supported by our global technology centres.

Our core competitive strengths are our market and technology leadership, strong customer relationships, well established presence in developing markets and our global reach, all of which facilitate the expansion of our addressable markets.

Our ultimate goal is to create value for our customers, and to deliver sustainable, profitable growth for our shareholders giving a superior return on their investment whilst providing each of our employees with a safe workplace where he or she is recognised, developed and properly rewarded.

Forward looking statements

This announcement contains certain forward looking statements which may include reference to one or more of the following: the Group's financial condition, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies or synergies, budgets, capital and other expenditures, competitive positions, growth opportunities for existing products, plans and objectives of management and other matters.

Statements in this announcement that are not historical facts are hereby identified as "forward looking statements". Such forward looking statements, including, without limitation, those relating to the future business prospects, revenue, working capital, liquidity, capital needs, interest costs and income, in each case relating to Vesuvius, wherever they occur in this announcement, are necessarily based on assumptions reflecting the views of Vesuvius and involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward looking statements. Such forward looking statements should, therefore, be considered in light of various important factors that could cause actual results to differ materially from estimates or projections contained in the forward looking statements. These include without limitation: economic and business cycles; the terms and conditions of Vesuvius' financing arrangements; foreign currency rate fluctuations; competition in Vesuvius' principal markets; acquisitions or disposals of businesses or assets; and trends in Vesuvius' principal industries.

The foregoing list of important factors is not exhaustive. When considering forward looking statements, careful consideration should be given to the foregoing factors and other uncertainties and events, as well as factors described in documents the Company files with the UK regulator from time to time including its annual reports and accounts.

You should not place undue reliance on such forward looking statements which speak only as of the date on which they are made. Except as required by the Rules of the UK Listing Authority and the London Stock Exchange and applicable law, Vesuvius undertakes no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this announcement might not occur.

Vesuvius plc, 165 Fleet Street, London EC4A 2AE

Registered in England and Wales No. 8217766

LEI: 213800ORZ521W585SY02

www.vesuvius.com