Vesuvius LON: VSVS reported resilient first-half performance for 2026 as pricing, cost reductions and improved cash generation offset operational disruptions in its Steel Division.
Chief Executive Patrick André said revenue increased 1.5% on a constant-currency basis, while trading profit was broadly unchanged from a year earlier at £74 million. Return on sales declined by 10 basis points on a constant-currency basis. The company proposed an interim dividend of £0.071 per share, unchanged from the prior year.
Free cash flow improved to an inflow of £27.5 million from an outflow of £13.24 million in the prior-year period. André attributed the improvement to stronger operating cash generation and working-capital discipline. Working-capital intensity declined to 23.1% from 23.6%, while pro forma net debt to EBITDA improved to 1.9 times.
Steel disruptions weighed on first-half results
Operational problems in North America and India constrained the Steel Division’s ability to meet demand and reduced first-half profitability. André said a supplier quality defect involving graphite raw material affected production at the company’s Charleston plant in the U.S., which supplies intermediate products to isostatic plants globally. The issue reduced capacity at several plants in North America, Europe and Asia and led to higher logistics costs.
Vesuvius said its quality controls identified the defect before finished products were shipped to customers. The raw material has been replaced, additional controls have been introduced, and the issue is now fully resolved, André said.
The company also identified deficient maintenance practices at two important U.S. manufacturing facilities, limiting equipment availability and production capacity. Maintenance programs and oversight have been upgraded, with catch-up work expected to be completed by year-end. In addition, Vesuvius is transferring experienced manufacturing personnel from elsewhere in the group to U.S. facilities after difficulty hiring qualified local replacements.
André estimated that the three U.S. operational issues reduced group results by about £6 million during the first half. Separately, ramp-up difficulties at the company’s new Vizag facility in India reduced trading profit by an estimated £2 million. Two of three newly installed production lines are now operating at full capacity, while the third is expected to reach nameplate capacity before year-end.
“All the operational challenges which limited our growth and profitability during the first half are now fully identified and are being addressed,” André said. Vesuvius expects the issues to be resolved by the end of 2026, with their effect disappearing from 2027.
Chief Financial Officer Mark Collis said positive pricing of about £21 million offset a £16 million volume decline. He said Steel Division revenue could have been roughly £20 million higher without the operational constraints. The company cited £12.6 million of customer demand it could not meet, £9.6 million of lower equipment sales, £8.5 million related to the closure of three North American steel plants, and £4.5 million of avoided European sales because of credit risk.
Foundry growth and MMS integration support earnings
The Foundry Division increased revenue by 8.7% and trading profit by 32.7% on a constant-currency basis, supported by pricing, market-share gains, structural cost actions and the integration of the MMS crucible business.
André said the MMS acquisition was being integrated successfully and that synergies were on track to exceed expectations. Collis said MMS, which generated £6 million of annual trading profit when acquired, contributed £4 million during the first half. The company expects selling, general and administrative synergies to begin flowing and manufacturing synergies to emerge over the next 12 to 18 months.
Vesuvius has announced that a crucible plant in Germany will close by the end of 2027 as part of the manufacturing integration. André also said the company would consider small bolt-on acquisitions that could complement MMS if appropriate opportunities emerged.
Across the group, Vesuvius delivered £7.4 million of recurring cash cost savings in the first half and maintained its target of at least £55 million of savings by 2028. Collis said the savings stemmed from plant closures, moving production to lower-cost operations, automation-related headcount reductions, systems improvements and reorganizations. The company continues to target £10 million of savings for the full year.
Steel-market recovery expected to broaden
André said steel production outside China, Russia, Iran and Ukraine rose 3.8% in the first half, with North America up 5.7% and EIMEA, excluding Iran, Russia and Ukraine, up 3.4%. China’s steel production declined 3%.
Vesuvius expects European steel production to improve in the second half following new EU steel regulations that became effective July 1. André said excess imported inventories may need to be absorbed first, but the company expects an acceleration in EU production from the fourth quarter and more significant growth in 2027.
Flow Control improved both trading profit and return on sales despite the operational disruptions. Advanced Refractories was more heavily affected by the U.S. and Indian issues, as well as pricing pressure in Europe from Chinese competitors. André said Vesuvius is reviewing and optimizing its European Advanced Refractories manufacturing footprint and expects this work to be completed by the first quarter of 2027.
The company maintained research-and-development spending at about 2% of sales and launched nine products during the first half. Its new-product sales ratio reached 21%, above its internal 20% target. Vesuvius also secured orders for four Flow Control and three Advanced Refractories robotics equipment projects, compared with one and two, respectively, in the prior-year period.
For 2026, Vesuvius increased its capital-expenditure guidance to between £75 million and £80 million, around £5 million above its previous estimate, reflecting investment in an automated central warehouse in Skawina and ongoing North American projects. Collis said the company aims to offset the higher spending through further working-capital and VAT-balance improvements.
Looking ahead, André said Vesuvius expects full-year trading profit to be slightly ahead of 2025 on a constant-currency basis, while remaining mindful of geopolitical uncertainty related to the Middle East.
About Vesuvius (LON:VSVS)
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.
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