TIDMRHIM
RNS Number : 7720C
RHI Magnesita N.V.
15 June 2023
RHI Magnesita N.V.
("RHI Magnesita" the "Company" or the "Group")
TRADING UPDATE
RHI Magnesita, the leading global supplier of high--grade
refractory products, systems and solutions, today provides an
update on trading for the five months ended 31 May 2023 (the
"Period").
Trading update for the five months ended 31 May 2023
The momentum of improving profitability and margins delivered in
Q1 2023 continued in April and May, as refractory pricing was
largely maintained against a background of reducing costs.
Refractory sales volumes in the Period excluding M&A were 7%
lower year on year, in line with overall market demand. Steel,
cement and glass demand outside of India remains soft due to a
slowdown in construction activity, with some glass project
postponements now evident. Demand in the non-ferrous metals segment
continues to be resilient. As anticipated due to the subdued demand
backdrop and reducing input costs, the Group is beginning to
experience sales price deflation in a number of its markets which
is expected to continue and possibly accelerate through the
remainder of the year.
Refractory EBITA margin contribution for the Period, which
excludes vertical integration benefits, was better than expected,
supported by cost deflation in April and May, as the cost of
freight and purchased raw material reduced, partially offset by
weaker fixed cost absorption due to lower production volumes.
The continued lower pricing environment for magnesite-based raw
materials means that the Group's vertical integration EBITA margin
contribution remains subdued and in line with the 1.8% of Group
margin delivered in the second half of 2022.
As a result, the overall Adjusted EBITA margin for the Period
was 12.1% (2022: 11.6%), delivering Unaudited Adjusted EBITA of
EUR174 million (2022: EUR155 million).
Financial position
Net debt to EBITDA remains at a similar level to the 2.1x
reported at 31 March 2023, including a 12 month historic
contribution from businesses acquired during the period.
Absolute net debt at 31 May 2023 was largely unchanged from 31
December 2022, supported by strong operating cashflow. The Group
continues to retain significant liquidity of EUR1.2 billion.
Net Working capital (before consolidation of M&A) was down
slightly from its 31 December 2022 level, as reductions in
inventory and accounts receivable were largely offset by lower
accounts payable. The Group continues to prioritise security of
supply for its customers in order to support recent market share
gains.
Total capital expenditure in the five months to 31 May 2023 was
EUR42 million, out of overall guidance of EUR200 million for 2023,
with spending weighted towards the second half.
M&A increased net debt by EUR268 million in the first five
months of the year, which was partially offset by the Qualified
Institutional Placement ("QIP") by RHI Magnesita India Ltd, which
raised approximately EUR101 million in April 2023. The QIP is to be
followed by an equity investment of EUR22 million by the Group in
RHI Magnesita India Ltd via a Preferential Issue which is expected
to complete in June 2023. In the second half of the year the
previously announced acquisition of Seven Refractories for a cash
consideration of EUR95 million is expected to be completed.
Outlook
The outlook for the Group's key end markets and consequently
customer volumes remains uncertain, with the order book currently
suggesting only a moderate volume increase in H2, if at all,
resulting in ongoing under-absorption of fixed costs. Pricing
pressure is expected to continue and possibly accelerate through
the remainder of the year.
Supported by the stronger than expected performance in the first
five months of the year, the Board now expects a modest
outperformance on its earlier 2023 EBITA and EBITA margin
guidance.
Leverage, measured as a ratio of net debt to EBITDA, is expected
to remain above 2.0x as the Group further executes on its M&A
pipeline.
For further enquiries, please contact:
Chris Bucknall, Head of Investor Relations
Tel +43 699 1870 6490
E--mail: chris.bucknall@rhimagnesita.com
For media enquiries:
Hudson Sandler
Tel +44 020 7796 4133
E-mail: rhimagnesita@hudsonsandler.com
About RHI Magnesita
RHI Magnesita is the leading global supplier of high-grade
refractory products, systems and solutions which are critical for
high-temperature processes exceeding 1,200degC in a wide range of
industries, including steel, cement, non-ferrous metals and glass.
With a vertically integrated value chain, from raw materials to
refractory products and full performance-based solutions, RHI
Magnesita serves customers around the world, with around 13,500
employees in 33 main production sites and more than 70 sales
offices. RHI Magnesita intends to leverage its leadership in terms
of revenue, scale, product portfolio and diversified geographic
presence to target strategically those countries and regions
benefitting from more dynamic economic growth prospects.
The Group maintains a premium listing on the Official list of
the London Stock Exchange (symbol: RHIM) and is a constituent of
the FTSE 250 index, with a secondary listing on the prime segment
of the Vienna Stock Exchange (Wiener Börse). For more information
please visit: www.rhimagnesita.com
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END
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June 15, 2023 02:00 ET (06:00 GMT)
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