AGM Trading Update
Vesuvius plc, a global leader in molten metal flow engineering, releases the following Trading Update in conjunction with its Annual General Meeting being held today.
At our year-end results in early March, we highlighted encouraging early signs of improvement in the global market environment. This trend has continued since then across our major regions resulting in our delivery of a strong Q1 2017 in comparison to a relatively weak Q1 2016. Consequently, whilst it is still early in the year and whilst recognising the inherent uncertainty in predicting end market resilience, our expectations for 2017 trading performance are cautiously optimistic.
We have benefitted in Q1 2017 from the 5.7% year-on-year growth in global steel production, as reported by the World Steel Association. However, this Q1 2017 increase in global steel production is off the relatively low base of Q1 2016 and full year 2017 growth expectations for the market are materially lower than this figure. In Foundry, the market environment remains mixed with light vehicles slowing in the USA and static in the rest of the world. Heavy truck and mining sales are showing slight signs of recovery but this varies by region.
We continue to make progress in the delivery of our restructuring programme. In addition to the benefits previously announced, we have increased the total targeted savings of the current restructuring programme by £5m at no extra cost. We expect to see the benefit of this additional £5m saving commence in the final quarter of the year such that the impact in 2017 will be limited. The total targeted annual savings now stand at £40m, up from £35m, whilst associated costs remain unchanged at £45m. We continue to assess restructuring opportunities across our businesses which could potentially yield further savings in the future.
Although Sterling has strengthened against most major currencies during 2017, we continue to benefit from a foreign exchange tailwind given that Sterling remains weaker in Q1 2017 than its average 2016 level. In Q1 2017, we have benefited from a foreign exchange tailwind of approximately £2.8m compared with average 2016 rates. All things being equal, based on the average exchange rates in Q1 2017, and were current spot foreign exchange rates to persist for the remainder of 2017, this would have increased our 2016 Trading Profit by approximately 7%.
Whilst working capital has shown some increase in absolute terms due to growth in sales, we have achieved a modest reduction in working capital as a percentage of sales during the quarter. Similarly, the net debt / EBITDA ratio has improved from the 1.8x at year end 2016 to within our preferred range of between 1.75x and 1.25x where we expect to remain for the year.
We are delighted that Holly Keller Koeppel joined the Board on 3 April 2017, as an Independent Nonexecutive Director. Holly has 35 years of global experience in business and finance. Holly serves on the Audit, Remuneration and Nomination Committees.
François Wanecq (Chief Executive) and Guy Young (Chief Financial Officer) will be hosting a conference call for analysts and investors at 08.30 (UK time) today (10 May).
To join the call, please use the dial in number below:
+44 (0)33 0336 9107 all participants
Confirmation code: 1116529
To listen to the replay of the call use the following number:
+44 (0)20 7984 7568 non-US participants
+1 719 457 0820 US participants
Confirmation code: 116529
ANNUAL GENERAL MEETING
The Group’s Annual General Meeting is being held today at 11.00 (UK time) at The Lincoln Centre, 18 Lincoln's Inn Fields, London WC2A 3ED.
The Vesuvius final 2016 dividend of 11.40 pence per share will be paid, subject to approval at the Annual General Meeting, on 19 May 2017 to shareholders on the register as at 7 April 2017.
Vesuvius’ half year results for the six months ending 30 June 2017 are expected to be announced on Thursday, 27 July 2017.
For further information please contact:
+44 (0) 207 822 0000
Chief Financial Officer
+44 (0) 207 822 0000
Group Head of Corporate Finance
+44 (0) 207 822 0027
Investor Relations Manager
+44 (0) 207 822 0016
John Olsen/Jamie Ricketts/Ollie Hoare
+44 (0) 203 128 8100
About Vesuvius plc
Vesuvius is a global leader in molten metal flow engineering 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 energy consumption. 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.