Vesuvius Plc · LSE:VSVS
Vesuvius — FY2022 Earnings Presentation
32 slides from Vesuvius's earnings presentation, Mar 2, 2023
Slide 1: Full Year 2022 Results
Full Year 2022 Results 02 March 2023 Think beyond. Shape the future. 1
Slide 2: Disclaimer
Disclaimer This presentation (which includes this document, the oral presentation of this document, any question-and-answer session that follows that oral presentation and any other materials distributed at, or in connection with, such presentation), which has been prepared by Vesuvius plc (the “Com
Slide 3: Contents
Contents • Performance update • Financial review • Outlook • Appendix 3
Slide 4: Performance update
Performance update 4
Slide 5: Record set of results in 2022
Record set of results in 2022 Revenue Trading profit Return on sales £2,047m £227m 11.1% +25% +60% +240 bps Reported change Reported change Reported change +18% +50% +240 bps Underlying change Underlying change Underlying change Headline EPS Net debt / EBITDA Cash conversion 56.5p 0.9x 82% +60% Dec
Slide 6: Record results and market share gains despite difficult markets and inflationary cost pressures
Record results and market share gains despite difficult markets and inflationary cost pressures ▪ Strong commercial performance despite declining markets and cost pressure • Successful price increase in both Steel and Foundry, fully recovering input cost increases • Sales growth of 28% and strong ma
Slide 7: Steel production declined in all major regions in 2022, except India
Steel production declined in all major regions in 2022, except India % 15 Crude steel production volume Steel production Q4-22 v Q4-21 10 5% 3% 5 India 0% Mexico -5% 0 China -7% Brazil -10% South Korea USA -9% -5 Canada Japan Taiwan Germany -15% -10 Italy EU27+UK -17% Russia -20% Turkey -22% -15 -25
Slide 8: Flow Control volumes outperformed market in all major regions ex. China
Flow Control volumes outperformed market in all major regions ex. China India Vesuvius: +14.0% Crude steel production growth – 2022/2021 China Steel production: +5.5% Vesuvius: -2.2% Steel production: -2.1% South America Vesuvius: +5.2% Steel production: -5.5% EEMEA ex Iran Vesuvius: -12.6% Steel pr
Slide 9: Divisional performance: strong progress in Steel
Divisional performance: strong progress in Steel 2022 performance Steel Division (£m) 2022 2021 Change Underlying change (%) (%) ▪ Profitability up 69% and margin +280bps due to pricing initiatives Flow Control 811 649 25% 20% and technological differentiation Advanced Refractories 645 489 32% 19% ▪
Slide 10: Foundry markets declined on average in 2022
Foundry markets declined on average in 2022 Volume growth in Foundry end markets - 2022 vs 2021 Light Vehicles Medium & Heavy Vehicles Mining and Construction Equipment General Engineering Power Generation Railway and Marine 25.0% • Foundry end markets remained 15.0% weak in 2023, especially in EMEA
Slide 11: Divisional performance: resilience in Foundry
Divisional performance: resilience in Foundry 2022 performance 2022 2021 Change Underlying change Foundry (%) (%) ▪ Despite persistent weakness in end markets, the Foundry division Revenue 551 471 17% 13% improved performance by 130bps, due to price increases in all markets and parallel market share
Slide 12: Ongoing capacity expansion to drive growth and margin
Ongoing capacity expansion to drive growth and margin Expansion programme ▪ c. £110m growth capex over two years in 2022 and 2023 (c. 60% of total capex) ▪ Flow Control expansion in India and EMEA to serve growing Asia and EEMEA markets ▪ Advanced Refractory expansion in India to service Asia market
Slide 13: Investments in growth regions on track
Investments in growth regions on track ▪ Kolkata VISO expansion ▪ Expansion of Chinese Foundry Plant ▪ Groundbreaking ceremony of new Vizag plant 13
Slide 14: 15 new products launched in 2022…
15 new products launched in 2022… New Flow Control Product: New Foundry Product:: Anti-penetration liner for VISO in ROTOCLENE stainless steel ▪ Revolutionary melt treatment technology for steel foundries, resulting in a significant improvement in melt and casting quality, ▪ This product solves the
Slide 15: … and many more exciting new products for 2023
… and many more exciting new products for 2023 Next-generation DuraSleeve VISO New environmentally- product friendly binder Improved efficiency Better sustainability performance Higher quality of customers’ finished product Improved safety performance New Foundry degassing rotor New robotic product
Slide 16: Significant progress in our sustainability agenda
Significant progress in our sustainability agenda CO2 reduction actions ▪ 19% CO2 reduction in 2022 vs. 2019, on track for 20% reduction by 2025 and 50% reduction by 2035 on track ▪ Total sustainability capex to 2035 of c. £60m ▪ Carbon pricing integrated into our capex analysis which supports the s
Slide 17: CO2e reduction plan and targets to reach net zero
CO2e reduction plan and targets to reach net zero 0.5 0.45 0.4 -19% CO2e (Scope 1+2) / tonne product shipped 0.35 0.3 2035 target: -50% 0.25 0.2 0.15 0.1 0.05 0 2019 2020 2021 2022 2035 2050 17
Slide 18: Vesuvius is also helping its customers…
Vesuvius is also helping its customers… …reduce their CO2 emissions …contribute to sustainable energy generation ▪ Durasleeve – 20% more durable than previous sleeve due to better ▪ Foundry China has worked with a customer entering the wind erosion resistance energy market ▪ Allows for increased pro
Slide 19: Financial Review
Financial Review 19
Slide 20: Full recovery of inflationary input costs has driven revenue growth
Full recovery of inflationary input costs has driven revenue growth Group revenues up 25% on a reported basis (+18% on an underlying basis) (£m) +37 +331 2,047 2,010 2,010 +68 +43 1,710 1,679 1,643 1,643 -74 1,636 1,636 page 20 2021 FX 2021 Market Market Price 2022 Universal 2022 Reported Underlying
Slide 21: Record trading profit and return on sales
Record trading profit and return on sales Trading profit up 60% on a reported basis (+50% on an underlying basis) Return-on-sales increased by 240bps on a reported and underlying basis RoS (£m) 11.1% +70 +6 227 221 221 RoS 8.7% +14 +5 148 151 142 142 -11 137 137 2021 FX 2021 Net volume 2021 input Pr
Slide 22: Income statement
Income statement 2022 2021 Change (%) (£m unless indicated) Actual Actual As reported Underlying1 Revenue 2,047 1,643 +25% +18% Trading Profit 227 142 +60% +50% Return on Sales (ROS %) 11.1% 8.7% +240 bps +240 bps Post tax Share of JV Results 1 1 Net Finance Costs -11 -6 Headline Profit Before Tax 2
Slide 23: Strong cash conversion performance
Strong cash conversion performance Cash conversion at 82% despite significant investment in growth capex £m Cash conversion: 82% +56 +25 -35 248 -33 239 227 227 186 -53 -1 186 186 2022 Depreciation Trade Other "Stay-in- Growth Other Adjusted Reported working working business" capex operating trading
Slide 24: Working capital still high despite improvement in H2
Working capital still high despite improvement in H2 Broadly stable debtor and creditor days, while inventory levels remain raised Receivables (constant currency, £m) Trade Working Capital / Revenue (12m average) Days 78 78 78 (12m) 26.6% 369 433 378 24.9% 31 Dec 21 30 June '22 31 Dec '22 23.9% 24.0
Slide 25: Strong balance sheet – positioned for growth
Strong balance sheet – positioned for growth Net debt at 31 December 2022 was £255m, a decrease of £22m versus 2021 Net debt/EBITDA improved from 1.4x in 2021 to 0.9x in 2022 £m 277 +17 +58 255 238 +11 +21 180 +48 169 148 +9 100 -186 91 Net debt Adjusted Net interest Income FX Right-of-use Dividends
Slide 26: Looking ahead
Looking ahead 26
Slide 27: Outlook
Outlook ▪ Looking forward, we expect to continue to successfully achieve market share gains through technological differentiation and new product launches. We are also confident in our ability to cover cost increases with pricing. ▪ Steel and Foundry markets have remained weak at the beginning of 20
Slide 28: Appendix
Appendix 1 Think beyond. Shape the future. 28
Slide 29: Technical guidance for 2023
Technical guidance for 2023 ▪ Depreciation c. £60m - £65m ▪ Interest cost c. £16m (income statement) and c. £13m cash cost ▪ Tax - P&L effective rate c. 27.5%, of which cash tax is c. 80% of the P&L charge ▪ Capex c. £100m ▪ FX – see table below, showing impact of a movement in currency against ster
Slide 30: Financial summary (reported)
Financial summary (reported) 2022 2021 Year-on-year Underlying (£m) (£m) change change (1) Revenue 2,047.4 1,642.9 +25% +18% Trading Profit (2) (EBITA) 227.2 142.4 +60% +50% Return on Sales (2) 11.1% 8.7% +240 bps +240 bps Operating Profit 216.8 132.7 +63% Headline Profit Before Tax (2) 217.0 137.3
Slide 31: 5 year history at constant currency
5 year history at constant currency 2018 2019 2020 2021 2022 Revenue (£m) 1,755.8 1,659.7 1,447.6 1,712.5 2,047.4 Steel 1,215.4 1,167.3 1,043.9 1,229.2 1,496.4 Foundry 540.5 492.5 403.7 483.4 551.0 Trading Profit (£m) 188.9 173.4 100.4 147.7 227.2 Steel 124.7 117.2 76.9 107.0 172.7 Foundry 64.2 56.3
Slide 32: Think beyond. Shape the future.
For further information, please contact: Rachel Stevens Group Head of Investor Relations rachel.stevens@vesuvius.com Think beyond. Shape the future. 32