LONDON (ShareCast) - Vesuvius, a company focused on molten metal flow engineering, cheered investors after reporting an increase in trading profit despite challenging market conditions and an 'unfavourable' economic environment.

The company, which is listed on the FTSE 250, delivered a 6.6% increase in reported trading profit to £140.0m (2012: £131.3m), largely the result of its self-help initiatives which helped offset a 2.4% decline in revenue from continuing operations, down at £1,511m.

Underlying revenue, excluding the impact of exchange rate movements, acquisitions and disposals, declined by 0.8%.

Significantly, manufacturing costs were reduced to £1,100m from £1,149m in 2012. Overall margins progressed from 8.5% in 2012 to 9.3%, while underlying margins increased by one percentage point (underlying 2012 margin: 8.3%).

François Wanecq, Chief Executive of Vesuvius, said: "In our first complete year as an independent company, we have successfully initiated the recovery of margins across the group despite an unfavourable economic environment.

"Market conditions remained challenging in 2013, continuing from the reduced levels of activity seen in the second half of 2012, and sterling strengthened substantially in the second half of 2013, impacting our reported growth numbers.

"Against this backdrop we have taken a disciplined approach to implementing our stated strategy. We streamlined our business portfolio and activities, exiting non-core low-margin businesses, further improved the quality of our products and services, and implemented self-help measures to increase the productivity of our own businesses. The result is improved profitability, strong cash flow, and a more focused group."

Looking ahead to 2014, the group said it expected the underlying trading environment to be broadly similar to last year. It is currently progressing with its plan to improve operational efficiency across the group, which it predicts will improve both its trading margins and working capital performance.

However, it warned that "if the recent strength of sterling continues it will have a negative impact on our reported growth in 2014".

The share price jumped 4.55% to 462.20p by 11:15 Tuesday.

NR

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