November trading update
Vesuvius plc, a global leader in molten metal flow engineering, announces the following update covering trading in the period 1 July to 31 October 2020.
SAFETY RESPONSE TO COVID-19
Vesuvius' priority remains the health and safety of our employees and other stakeholders. We continue to take all necessary actions to maintain a safe working environment for our employees. All our plants have been fully operational since April and are prepared to ramp-up production as the recovery progresses.
Demand in our end markets has improved, albeit slowly, in both our Steel and Foundry divisions during Q3 2020 and these trends have continued into Q4. On a constant currency basis, our sales in Q3 were up 7.0% quarter on quarter and although down 14.3% year on year, this is an improvement on the sales decline of 26.2% in Q2 compared to Q2 2019. The improvement in trading continued into October 2020 with sales down a more modest 7.5% compared to October 2019.
We are on track to deliver the targeted £10m per quarter of Covid-19 crisis-related savings in H2 2020 and our restructuring programmes remain on-track to deliver £19.4m per annum of recurring cost savings in 2020.
FINANCIAL POSITION AND LIQUIDITY
Our leverage has further reduced since H1 2020 and our available liquidity at the end of October was £448m, £73m higher than in February of this year, prior to the Covid-19 crisis impacting our financial results.
The efficient management of working capital has been an important factor in supporting our leverage reduction and liquidity during 2020. As at the end of October, trade working capital to sales (3-month average) was 22.4%, compared to 26.7% at 30 June 2020.
Covid-19 infection rates continue to rise on a global basis and, therefore, significant uncertainty remains regarding the speed of recovery during 2021, despite the partial recovery in trading since Q2 2020.
Following a review of our results to the end of October 2020 and an updated forecast for the remainder of the year, we expect Group trading profit (EBITA(1)) in 2020 to be broadly in-line with current consensus market expectations(2).
(1) Excludes separately reported items.
(2) The market consensus as at 11 November for 2020 Trading Profit (EBITA(1)) is £99.2m, based on estimates compiled by Vesuvius.
Patrick André (Chief Executive) and Guy Young (Chief Financial Officer) will be hosting a conference call for analysts and investors at 08.30 UK time today (12 November 2020).
To join the call, please use the dial-in numbers below:
UK: +44 (0) 203 107 0289
US: +1 (918) 922 6506
Conference ID: 7066638
In order to join the call, participants will be required to provide the Conference ID Number listed above
A replay of the call will be available approximately 2 hours after the event for two weeks on the following number:
UK: +44 (0) 203 107 0235
US: +1 (855) 859-2056
Confirmation code: 7066638
For further information, please contact:
Patrick André, Chief Executive - +44 (0) 20 7822 0000
Guy Young, Chief Financial Officer - +44 (0) 20 7822 0000
Euan Drysdale, Group Head of Corporate Finance - +44 (0) 7584 641315
Pamela Antay, Head of Investor Relations- +44 (0) 7827 802277
MHP Communications - Andrew Jaques/ Peter Lambie - +44 (0) 203 128 8100
About Vesuvius plc
Vesuvius is a global leader in molten metal flow engineering and technology, serving process industries operating in challenging high-temperature conditions.
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.
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.