Vesuvius results hurt by weak steel and foundry market

Vesuvius said its trading in 2012 was hurt by a weaker steel and foundry market in the second half.

Vesuvius said its trading in 2012 was hurt by a weaker steel and foundry market in the second half.

The group, which makes ceramic moulds and linings for steelmakers and foundries, saw revenues fall by 8.1% year-on-year to £1.5m and trading profit plunge 27.5% to £133m.

Headline profit before tax came to £110.0m, a 29.1% decline from the previous year's £156.5m, reflecting the costs of restructuring.

Chief Executive, Franois Wanecq, said the company has decided to exit low margin businesses and lower its fixed cost base to drive profitability and cash flow.

Last year the group sold its Andreco-Hurll refractory lining installation business in Australia, and closed a Solar Crucible facility in the Czech Republic. The US Precious Metals Processing operation, which provides semi-finished precious metals to the jewellery industry, was also sold in May.

A decline in global steel and foundry production also put a damper on the company's results.

In the second half, steel production in the European Union and North America fell by almost 10% compared to the first half.

Foundry in key end-markets such as heavy truck production in the US and Brazil, high-end automotive in Europe, and the global wind power sector, weakened significantly in the last half of the year.

"We reacted swiftly to this market downturn during the second half, closing a small steel consumables plant in China, transferring production to a larger, more efficient facility nearby," Wanecq said.

"We also exited the small, low margin VGT-Dyko brick refractories business in Germany."

He expects the company to increase margins as end-market start to recover this year.

A strong cash flow of £54.2m at year end, up from £32.1m a year earlier, will enable the group to invest in high value opportunities, he added.

The board recommended a final dividend of 9.5p per share, in line with the guidance set out at the demerger of its performance materials division to Alent.

RD

Recommended

How to be better at selling stocks
Investment strategy

How to be better at selling stocks

There is plenty of advice around about buying stocks, but not so much about when you should sell. John Stepek explains the two key things to know abou…
14 Jan 2022
Share tips of the week – 14 January
Share tips

Share tips of the week – 14 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
14 Jan 2022
Fintech: how to profit as technology transforms banking around the world
Share tips

Fintech: how to profit as technology transforms banking around the world

Financial technology – from apps to APIs to the cloud – is rapidly transforming financial services. This will spell doom for some incumbent firms, whi…
14 Jan 2022
Three solid assets to buy for a low interest-rate world
Share tips

Three solid assets to buy for a low interest-rate world

Professional investor Luke Hyde-Smith of the Waverton Real Assets Fund, highlights three alternative investments to diversify your portfolio.
14 Jan 2022

Most Popular

US inflation is at its highest since 1982. Why aren’t markets panicking?
Inflation

US inflation is at its highest since 1982. Why aren’t markets panicking?

US inflation is at 7% – the last time it was this high interest rates were at 14%. But instead of panicking, markets just shrugged. John Stepek explai…
13 Jan 2022
Five unexpected events that could shock the markets in 2022
Stockmarkets

Five unexpected events that could shock the markets in 2022

Forget Covid-19 – it’s the unexpected twists that will rattle markets in 2022, says Matthew Lynn. Here are five possibilities
31 Dec 2021
Interest rates might rise faster than expected – what does that mean for your money?
Global Economy

Interest rates might rise faster than expected – what does that mean for your money?

The idea that the US Federal Reserve could raise interest rates much earlier than anticipated has upset the markets. John Stepek explains why, and wha…
6 Jan 2022