LONDON (ShareCast) - (Sharecast News) - RHI Magnesita reported a 13% improvement in revenue in its full-year results on Monday, to €2.55bn (£2.13bn), and by 16% in constant currency terms, with shipped volumes now above 2019 levels.
The FTSE 250 refractory systems company said adjusted EBITA totalled €280m, up from €260m in 2020 and in line with its guidance for between €280m and €310m.

It said those earnings were supported by a €1270m price increase programme, which was realised largely in the fourth quarter.

Magnesita reported "unprecedented" supply chain disruption in the 12 months ended 31 December, which resulted in higher freight, energy and purchased raw materials costs.

That led to a "significant" inventory increase, as well as the use of air freight to guarantee customer deliveries.

Net debt expanded to €1.01bn from €582m year-on-year, which the company's board put down to high inventories, with strong available liquidity of €1.18bn also recorded, broadly in line with 2020.

RHI Magnesita also reported on its exposure to Russia, Ukraine and the Commonwealth of Independent States (CIS) given the current conflict and sweeping global sanctions, confirming that it had 63 staff based in Russia and Ukraine, but no refractory production sites.

Around 3.4% of group revenues were from the CIS region in 2021, with the board saying that business would be impacted by sanctions.

The company said it would keep sanction escalations under "close review" to remain in full compliance, adding that it was expecting the primary financial impact to be from higher energy costs.

Looking ahead, Magnesita said that in its steel division there was a "strong" order book and visibility for the first half, although the high customer demand recovery experienced in 2021 wa sexpected to normalise in the second half.

The industrial division order book covered most of 2022, with lead times in some cases exceeding 12 months.

Industrial division margins would continue to benefit in the first quarter from the stronger pricing environment for cement customers, compared to the prior year.

Cost pressures from freight, energy and raw materials were, however, continuing into the new financial year, with "significant" labour inflation now also expected in both local currency and euro terms, as high inflation led to wage demands.

Further price increases became effective in January, and more price increases were under negotiation to preserve margins in response to ongoing cost inflation.

Net debt-to-EBITDA of 2.6x was above the group's targeted range of 0.5x to 1.5x, mainly due to inventory build.

RHI Magnesita said its gearing was expected to reduce in 2022, due to lower capital expenditure and growth in EBITDA.

"This has been a strong year of progress for RHI Magnesita in challenging conditions," said chief executive officer Stefan Borgas.

"Customer demand recovered much faster than was anticipated, creating an unprecedented strain on global supply chains and significant increases in costs and logistics lead times.

"We responded with €127m of price increases largely realised in the fourth quarter and increased inventories to keep our customers supplied throughout this period of disruption."

Borgas said that, despite logistics difficulties and market volatility, the company had progressed the strategic investments to deliver long-term growth and margin improvement.

"We agreed to acquire SÖRMAŞ in Turkey in October and we are making a new joint venture investment in Chongqing, China.

"Our strategic commitment to grow in new markets has been validated by strong organic revenue growth in both our India and China businesses.

"We enter 2022 with restored margins and ready to build further on our sustainability and technology leadership position in the global refractory industry."

At 0953 GMT, shares in RHI Magnesita were down 5.51% at 2,846p.

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