LONDON (ShareCast) - (Sharecast News) - Vesuvius said in an update on Tuesday that it expected full-year trading profit to be broadly in line with previous guidance, as price increases and structural cost savings helped offset a subdued steel market and temporary inefficiencies in its Foundry division.
The FTSE 250 molten metal engineering group reported that revenue for the four months ended 31 October was broadly in line with expectations, with year-to-date revenue slightly ahead of the prior year on a constant currency basis.

Sales in its steel division were supported by increased demand in Advanced Refractories and stable performance in Flow Control, while foundry revenue was marginally lower due to weak end-markets outside India and China, partly offset by market share gains.

Price increases implemented during the year were now offsetting cost inflation in the second half, and Vesuvius said its structural cost reduction programme remained on track, targeting £18m in savings this year and at least £55m of recurring annual savings by 2028.

The company also experienced some temporary production inefficiencies in its foundry operations during the period.

Global steel production outside China grew just 0.5% year-to-date, constrained by elevated Chinese exports, which rose more than 10%.

The company noted that had Chinese exports remained stable, production elsewhere would have increased by 1.7%.

Within regions, steel output in the EU and UK fell 5%, EEMEA rose 2%, and North America was broadly flat, with US production up 2% but declines in Canada and Mexico of over 5%.

India and Southeast Asia continued to show robust growth, up 10.5% and 8.3% respectively.

Vesuvius said global demand in its foundry markets outside India and China remained subdued due to high interest rates, though conditions were broadly stable.

It said it expected the medium-term outlook to improve as more than 60 countries, particularly in Europe and the Americas, introduced trade protection measures aimed at reducing Chinese steel exports and supporting domestic production.

The group said it was still focussed on cash generation, with working capital reductions on track and capital expenditure expected between £75m and £80m this year, reflecting the completion of its recent investment programme.

It said it expected to complete the acquisition of Morgan's Molten Metals Systems business by mid-November for £20m in cash and new shares in its Indian subsidiary, Foseco India.

The acquisition was expected to be earnings-accretive from 2026 and to deliver significant synergies from 2027.

"Notwithstanding the continued tough external environment, due to our efforts around cost and pricing management, we anticipate trading profit for the full year to be broadly in line with our previous guidance," the company said in its update.

It added that it remained confident in its "technologically differentiated business model," its exposure to long-term structural growth trends, and its ability to "further optimise the business in order to drive profit, margin and cashflow growth".

At 0923 GMT, shares in Vesuvius were up 0.86% at 377p.

Reporting by Josh White for Sharecast.com.

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