LONDON (ShareCast) - Molten metal engineering group Vesuvius saw revenues and profits slip year-on-year in the first half due to weak conditions in the global steel and foundry end-markets.

Group revenue from continuing operations was down 5.7% in the six months to June 30th to £773m. However, the top line was 6.1% better than the second half of 2012 as end-markets stabilised with rapid industry de-stocking coming to an end.

Profit before tax totalled £64m in the first half, down 9.9% from £71m the year before.

However, Chief Executive Officer François Wanecq said that the company delivered a "solid" performance in the first half, "in a trading environment that was generally stable but still operating at a substantially lower level than in the first half of last year". 

He said: "All of our businesses performed better than, or in-line with, their main end-markets."

Vesuvius declared its first interim dividend as a separate company of 4.75p per share.

The stock reacted positively to the statement on Friday morning, with shares up 5.8% at 465.5p early on.

Vesuvius is now focused solely on molten metal engineering after the disposal of the non-core precious metals processing at the end of May. This was seen as an "important strategic step" for the company following its formation after the demerger of Cookson last year.

Some £30m of the disposal proceeds (€56.8m) have been earmarked for a cash return to shareholders, of which £19.3m has been used so far to repurchase shares.

"Further portfolio rationalisation" was announced on Friday with the disposal of the firm's low-margin construction and installation division in Canada.

Going forward, Vesuvius gave a rather cautious outlook on industry conditions, saying that while trading did improve noticeably through the second quarter, this is typically its strongest period period before customer summer shutdowns in Europe.

"At the same time, it is evident that customer confidence has not yet returned fully, and there are no clear signs of re-stocking building up through the supply chain in either steel or foundry markets," the company said.

"Vesuvius has limited forward visibility of demand, and the most important driver of performance for the rest of the year will be the levels of activity seen in September, when major steel and foundry customers in Europe usually resume full operations after the summer."

BC

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