Vesuvius H1 2025 TU Earnings Report

Vesuvius EPS Results

• Actual EPS: GBX 17.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Vesuvius Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Vesuvius Announcement Details

• Quarter: H1 2025 TU
• Date: 8/6/2025
• Time: Before Market Opens
• Conference Call Date: N/A
• Conference Call Time: N/A

We are a global leader in metal flow engineering, providing a full range of engineering services and solutions to its customers worldwide, principally serving the steel and foundry industries.

Vesuvius H1 2025 TU Earnings Call Transcript

Key Takeaways

• Positive Sentiment: First-half trading profit of £77 million was in line with expectations, supported by short-term cost cuts and stronger-than-anticipated progress on the structural cost reduction programme.
• Negative Sentiment: Outlook for the second half is now expected to be broadly similar to H1 as challenging market conditions persist, with a full market recovery postponed to 2026 amid difficult pricing in Europe and China.
• Positive Sentiment: The company plans to significantly exceed its original £45 million annual recurring cash cost-savings target by 2028 through an expanded structural cost-reduction programme.
• Neutral Sentiment: European restructuring accelerates with the planned closure of selected UK foundry and Italian sensor plants, while investing in automation and digitisation at remaining flagship facilities.
• Positive Sentiment: Brownfield expansions in India are being ramped up to outpace local steel and foundry market growth over the next decade, leveraging existing sites for low-capex capacity increases.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the Vesuvius Trading Update. At this time, all participants are in listen only mode.

[Operator]

Later, we will conduct a question and answer session through the phone lines and instructions will follow at that time. I would like to remind all participants that this call is being recorded. I will now hand over to the CEO of Vesuvius, Patrick Andre to open the presentation. Please go ahead.

[Patrick André, CEO & Executive Director at Vesuvius]

Good morning, My name is Patrick Amsay, I'm the Chief Executive of Reservius. And today with me this morning is Marc Colise, our Chief Financial Officer. Thank you for joining at such short notice. The purpose of today's statements on this call is to talk about our 2025 outlook. We will give full details on our H1 trading when we announce when which is planned for the August 6.

[Patrick André, CEO & Executive Director at Vesuvius]

To set the context, we've seen during the first half a clear continuation of the challenging market conditions that we have noted during our AGM trading update in May with a continuing uncertain macroeconomic environment and subdued global industrial activity leading to a continuing business in both our end markets of steel and foundry. Against this difficult backdrop, our trading profit for the first half twenty twenty five is anticipated to be around £77,000,000 which is consistent with our expectations. Despite the negative market condition, this was possible thanks to not only short term cost reduction measures, but above all, a strong progress above our expectation in the implementation of our structural cost reduction program. And regarding this structural recurring cost reduction program, we are now planning to significantly exceed our objective of £45,000,000 of recurring cash cost savings per year that we had set for 2028. We are now planning to do significantly better than that.

[Patrick André, CEO & Executive Director at Vesuvius]

Regarding the rest of the year, contrary to our previous expectations, we are now anticipating that the challenging market conditions of the first half will mostly persist for the second half. We were in our pre Q guidance relatively heavily weighted on H2. What we see today is considering the remaining persisting uncertainty this recovery of market more being postponed to 2026. At the same time, the pricing environment remains difficult in particular in Europe and in China, which has been limiting for the time being our ability to fully recover through price increases labor cost inflation. However, we anticipate that we will progressively improve our pricing performance over the second half and we are passing price increases as we speak and some of them are already implemented to partially recover this gap between price and cost of the first half.

[Patrick André, CEO & Executive Director at Vesuvius]

However, this will be done with a delayed effect, which will still impact on a full year in year basis the year 2025. However, we anticipate that we will recover all of this by the end of 2025. As a result of this downgrading of our market expectations for the second half, we now expect our performance in the second half of the year to be broadly similar to what we've achieved during the first half with further progress being postponed to 2026 where we expect that our results should improve with first market improvement, but also the continuation of our cost reduction measures, which will produce not only the one we are implementing now, which will produce our full year effect in 2026, but we will continue to add more cost improvement measures in 2026. So now I propose to open the floor for questions and Marc and I will answer any questions you may have.

[Operator]

Thank you. We will now begin the question and answer session. Session. And your first question comes from the line of Vasu Mahendratta from JPMorgan. Please go ahead.

[Lushanthan Mahendrarajah, Capital Goods Equity Research Analyst at JP Morgan]

Good morning, guys. Thanks for taking my questions. I think I've got two, if that works. The first is just on the guidance and sort of sequentially flat in H2. Can I just check what are you assuming in terms of volumes and price cost in the second half? And it sounds like you're going be pushing pricing in the second half.

[Lushanthan Mahendrarajah, Capital Goods Equity Research Analyst at JP Morgan]

But I guess what makes you confident that that would get accepted by customers? And then the second question is just on market share. Can you talk about some of market share movements in H1 across the three businesses? And in the context of pushing prices into the second half, do you think your competitors will follow? And how do you think about market share in the second half as well? Thank you.

[Patrick André, CEO & Executive Director at Vesuvius]

Thank you, Louis. So on your first question, we expect the overall market situation to be more or less similar in H2 as compared with H1, which means that because of the traditional seasonality especially in Europe, volume to be a bit lower in H2 than in H1. However, we expect our pricing to be higher in H2 than in H1. And to answer your specific question about pricing, we are now clearly as we speak passing price increases. And most of the time our customers understand the reason and accept those price increases.

[Patrick André, CEO & Executive Director at Vesuvius]

But when they do not accept those pricing figures, we have no other choice that we increase prices nevertheless, because our principle that we have to recover all costs with prices has to remain valid. So we are now in some cases having to force some pricing change to customers. But many of them the vast majority of them also understand the situation the industry globally is in and are the long term relationships with us and understand the reasons why we need to increase prices. Regarding market share, the three business units have been gaining market share during the first half to control on this. But also advanced the factories.

[Patrick André, CEO & Executive Director at Vesuvius]

The advanced the factory which has been over the past two years doing very well in Asia, but lost a little bit of market share in Europe and in The U. S. We are now past the inflection point. We have started to recover some market share in both The U. S.

[Patrick André, CEO & Executive Director at Vesuvius]

And in Europe in Advanced Categories. So we had a relatively good market share performance in each and every of the key business units during the third half and we expect this to continue in the second half.

[Lushanthan Mahendrarajah, Capital Goods Equity Research Analyst at JP Morgan]

Okay. Brilliant. Thank you.

[Operator]

Your next question is from the line of Andrew Douglas of Jefferies. Your line is open.

[Andrew Douglas, Managing Director at Jefferies Financial Group]

Good morning, guys. Can you just talk in a bit more detail maybe about the restructuring plans that you've outlined? You've talked about having additional benefits over and above the €45,000,000 It might be a bit early, so apologies for the question. But does this involve materially more restructuring actions in Europe potentially given your commentary about Europe? And how do we balance the challenges that you have in Europe maybe from a capacity perspective with the opportunities in India?

[Andrew Douglas, Managing Director at Jefferies Financial Group]

India's steel production is still clearly growing very nicely. I suspect more capacity needs to be put into India. So is this just a shift from Europe to India and maybe Southeast Asia? Or do you have to take more drastic action in Europe from a capacity perspective? And just broadly my second question or it's probably the third question.

[Andrew Douglas, Managing Director at Jefferies Financial Group]

With regards to India and Southeast Asia, it sounds like they're the main positive hotspots for you guys at the moment. Can I just confirm that that's indeed the case?

[Patrick André, CEO & Executive Director at Vesuvius]

Thank you, Andy. Regarding your first question, you are certain. We are, I would say, accelerating and amplifying our restructuring in Europe. You know that we've closed foundry plants in The U. K.

[Patrick André, CEO & Executive Director at Vesuvius]

Beginning of the year. We've announced a few days ago that we will close the manufacturing activity of one of our sensors and probes plants in Italy. So we are clearly heavily restructuring our manufacturing footprint in Europe to make it to adapt its size to what we believe will be the size of the European market going forward. And also to make sure that those plants that really remain in Europe because we will keep some plants in Europe and the European market remains important for us even if it is declining. But those plants will be extremely competitive because we are investing in automation, digitalization in those plants which will be the long term flagship plants of the group in Europe.

[Patrick André, CEO & Executive Director at Vesuvius]

But it's clearly heavy restructuring in Europe in terms of manufacturing and capacity. At the same time, we are continuing to expand in India Our new capital investment, which we have invested over the past two years in India is now ramping up. So this gives us, I would say, for the next two or three years, all the capacity we need to continue to follow the very strong growth of the Indian market. But at the same time, because we don't believe that India I'm answering a little bit your second question, see the growth in India extending much beyond the two, three years to come. What we are really seeing is India having its acoustic movements and we are very, very positive about the growth in India for the next not only two years, but for the next ten or twenty years.

[Patrick André, CEO & Executive Director at Vesuvius]

So two, three years from now, we are already starting to study the capacity expansion, which will be needed in India to continue to support our growth beyond the next two, three years. The good news is that all this in Genelecrosse we have the room to do it. We have the space with the acquisition that we've made a few years ago of the new VIZAC site in India. We have the space the industrial space ready and available to accommodate those expansion. Our Kolkata plant also has room for further expansion for the flow control products, for the flow control hydrostatic products.

[Patrick André, CEO & Executive Director at Vesuvius]

And the cost of this expansion is limited because it's our brownfield investment not greenfield. And so we have the unique advantage in India to be able to expand very significantly over the next ten years of production capacity to follow the growth of the market at marginal CapEx cost simply by brownfield expansion of our two existing sites in Kolkata and in Vailai. That's I think a key advantage that none other really has in India. This will support our growth in India over and above the natural strong growth of the market in India. We are outpacing both in foundry and in steel the growth of the steel market in India and we intend to continue to do so in the years to come.

[Andrew Douglas, Managing Director at Jefferies Financial Group]

Very clear. Thank you.

[Operator]

Your next question is from the line of Hal Hallum of Peel Hunt.

[Harry Philips, Research Analyst at Peel Hunt]

Please go ahead. Good morning, everyone. Just a couple of questions also please. Just thinking about the sort of price volume dynamic, particularly in the second half, I mean it would be helpful if you could give us an idea of where revenue was alongside the £77,000,000 EBIT you talked about? And then when thinking about that second half compared to where you thought it was going to be, as you say, what how much it won't be the balance between price and volume?

[Harry Philips, Research Analyst at Peel Hunt]

I suppose I'm just trying to work out the extent of the price pressure. And then on top of that, the sort of difference between foundry and steel because, obviously, if it's a European headwind particularly, then foundry looks like it's probably guessing a disproportionately large hit? And then I've got a question on cost savings as well, but maybe just start with that please.

[Patrick André, CEO & Executive Director at Vesuvius]

Thank you very much Harry. I will let Mark comment further. But before I pass over to Marc, regarding the price volume for the second half, we expect because of seasonality mostly not because markets will be that much worse, but because of seasonality, we expect volumes in the second half to be a bit lower than volume in the first half. But we expect prices to be better in the second half than in the first half. But maybe Marc you would like to comment further on that?

[Mark Collis, CFO & Executive Director at Vesuvius]

Yes. Thanks Patrick. So just to give you some numbers Harry which I think will help you. So revenue for the first half is just a tad over 900,000,000 So you basically see an 8.5% return on sales with the 77,000,000 for the first half. And then our current expectations for revenue for the full year are around GBP 1,850,000,000.00. So and the margin remains the same. So basically what you're seeing there in our best estimates are effectively as Patrick rightly said, lower volumes, but slightly better pricing.

[Mark Collis, CFO & Executive Director at Vesuvius]

And that's how we basically end up with a number in second half similar to the first half.

[Harry Philips, Research Analyst at Peel Hunt]

And that would sort of have a sense that steel is sort of it's sort of it just looks much more sort of foundry centric. Would that be right rather than steel? Steel looks a bit soft, but foundry looks a sort of bit more sort

[Patrick André, CEO & Executive Director at Vesuvius]

of It's clear that this profile is more or less half an hour. So it means that it's disproportionately more in foundry than in steel. However steel in Europe is soft. So steel in Europe is soft. What it's one of the important, I would say, market situation parameter is that it's not only the foundry market, which is soft in Europe.

[Patrick André, CEO & Executive Director at Vesuvius]

The steel market is now clearly showing sign of structural weakness in Europe and high press structural because we do not think that this is cyclical. The steel producers in Europe are clearly, if you you recall, one kind of disturbing. They have just hope that governments and the EU Commission will really enact will really take action to protect the steel sector in Europe even if there is a lot of talk about it. The last one is that they will say something in September after they are back from vacation, but nobody is really trusting that what they will say in September will be anything of substance. And so we start to see now some structural decisions by steel producers to move away from Europe.

[Patrick André, CEO & Executive Director at Vesuvius]

This is clearly putting the steel market in Europe in a declining in a structural declining trend. A miracle is always possible. Maybe the European Commission will wake up at some point. But I don't think anybody is putting that in their best case scenario.

[Mark Collis, CFO & Executive Director at Vesuvius]

That makes sense. And then just Harry the other thing I would just add to Patrick is the one thing to watch out for is what we would regard as mix. So or effectively the level of drop through on volume is definitely weaker this time around in steel compared to foundry. And it's really a feature of just the clients buying services at the lower end, particularly in Europe as they're trying to obviously minimize their operating costs. So we're seeing that's something that's a relatively new phenomenon is impacting the drop through significantly in And Europe and in

[Harry Philips, Research Analyst at Peel Hunt]

then just in terms of the cost savings, I mean, I remember right, you're sort of looking at about GBP 13,000,000, 14,000,000 this year. Does that change materially? I mean, is it too early? Or will you wait till the August 7 to give us maybe an idea of how that flows?

[Patrick André, CEO & Executive Director at Vesuvius]

Mark will comment further. I will not yet fully expect more than 13 this year. So we are really in terms of recurring cash savings, we are really accelerating our program and expanding our program especially in Europe. And so not only we are increasing our €45,000,000 target for the year 2020, but already this year you should expect more recurring cash cost savings this year than what we had in our previous guidance. But maybe Marc can comment a bit further on that.

[Mark Collis, CFO & Executive Director at Vesuvius]

Yes. Certainly, Patrick. We will obviously we're definitely going to be of the 13 pro rata. So we're probably looking at order of magnitude of around 10 for the first half. And there's no reason why that shouldn't largely continue throughout the balance of the year, because it's obviously permanent savings and we're pushing harder in the second half particularly in foundry.

[Mark Collis, CFO & Executive Director at Vesuvius]

So I think that answers your question Harry that there's a lot stronger than what we're doing we're making a lot stronger progress than we anticipated at the start of the year. So ahead.

[Harry Philips, Research Analyst at Peel Hunt]

I mean, to be clear, but I don't misinterpret, so 20 for the year or thereabouts, just to

[Mark Collis, CFO & Executive Director at Vesuvius]

I think that's a fair assumption on the basis we tend to make sure travel

[Harry Philips, Research Analyst at Peel Hunt]

counted or something. Okay. Yeah.

[Mark Collis, CFO & Executive Director at Vesuvius]

And then, obviously, we've also continued with our short term cost reduction measures as well that we really instigated last year, and we'll continue with that throughout this year.

[Harry Philips, Research Analyst at Peel Hunt]

Yeah. And then just very finally, just on the tax charge and stuff, because obviously there's a bit of debate back in May around how to treat the the sort of let's call it one.

[Mark Collis, CFO & Executive Director at Vesuvius]

Yeah. Yeah. So no. I'm happy to give you an update.

[Mark Collis, CFO & Executive Director at Vesuvius]

So, yeah, just for the for everyone else's benefit, we repatriated around £50,000,000 of of additional cash from China through the introduction of a nonrecourse loan. The idea being that Chinese interest rates clearly a lot lower than anywhere else around the world. So while there's an annualized savings benefit and effectively a payback of about eighteen months, The one off downside is an additional withholding tax charge to repatriate that cash, which is about £3,000,000 and we were debating whether that was above or below the line impact from the tax charge itself. So in the end, we decided to record that as below the line. So we'll record the £3,000,000 as a separately reported item on the basis it is one off and that's been agreed with our auditors.

[Mark Collis, CFO & Executive Director at Vesuvius]

The headline tax rate effectively remains the same at 27.5%.

[Harry Philips, Research Analyst at Peel Hunt]

Yes. Perfect. Thanks very much indeed.

[Operator]

You. You have a further follow-up question from Harry Phillips of Peel Hunt. Please go ahead.

[Harry Philips, Research Analyst at Peel Hunt]

Sorry, just again a bit of housekeeping. Just to make sure I've got this right. The it was GBP 900,000,000 of revenue just had over the first half and sort of circa $1,850,000,000 for the year is the thought just to make sure I've got that Yes.

[Mark Collis, CFO & Executive Director at Vesuvius]

No, that's spot on.

[Harry Philips, Research Analyst at Peel Hunt]

Lovely. Thanks very much indeed.

[Operator]

And there are no further questions on the conference line. I will now hand over to management for closing remarks.

[Patrick André, CEO & Executive Director at Vesuvius]

Thank you. Thank you very much to all of you for taking the time to join the call today.

Participants

Executives

• Patrick André, CEO & Executive Director
• Mark Collis, CFO & Executive Director

Analysts

• Lushanthan Mahendrarajah, Capital Goods Equity Research Analyst at JP Morgan
• Andrew Douglas, Managing Director at Jefferies Financial Group
• Harry Philips, Research Analyst at Peel Hunt