Vesuvius Plc · LSE:VSVS
Vesuvius — H1 2024 Earnings Presentation
33 slides from Vesuvius's earnings presentation, Aug 1, 2024
Slide 1: Half Year 2024 Results
Half Year 2024 Results 1 August 2024 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: Results in line with our expectations despite weaker markets
Results in line with our expectations despite weaker markets Revenue Trading profit Return on sales £936.5m £97.2m 10.4% (2.0%) (0.9%) +10bps Underlying change Underlying change Underlying change Working capital Headline EPS intensity Net debt / EBITDA 23.2% 1.2x 21.8p (90bps) June 2023: 1.0x (2.9%)
Slide 6: Delivering against our strategic objectives
Delivering against our strategic objectives ▪ Market share gains in both Steel and Foundry divisions > Market share gains in Flow Control and Foundry > Advanced Refractories market share progressing in Asia ▪ Positive net pricing performance in both divisions ▪ Accelerated progress on cost-saving pr
Slide 7: Steel production in H1 2024 remained weak
Steel production in H1 2024 remained weak • India and EEMEA consistently strong • Americas and China weak • EU+UK stable at a very low level • EU27+UK, North and South America remain, for the time being, well below their normal levels of activity Size of bubble represents relative revenue of Vesuviu
Slide 8: Flow Control has continued to gain market share in most major regions
Flow Control has continued to gain market share in most major regions • Continued market share gains globally and in most major regions • Positive impact of technological leadership with new product sales ratio now exceeding 20% • Only exception to market share gains is the EU27+UK where we very car
Slide 9: Good performance of the Steel Division despite subdued market
Good performance of the Steel Division despite subdued market H1 2024 performance Steel Division £m H1 2024 (£m) H1 2023 (£m) underlying Change % underlying ▪ Revenue growth in the Steel Division driven by Flow Control Revenue • Market share gains in Flow Control Flow Control 393.7 383.6 2.6% • Prog
Slide 10: Foundry markets weaker than anticipated
Foundry markets weaker than anticipated c. 60% Foundry division revenue Vesuvius end-market exposure North Asia EU+UK North America China South America India General industrials market H1’24 vs H1’23 22% Light vehicle production H1’24 vs H1’23 78% 8% 16% 10% 9% 10% 35% Foundry General industrials, i
Slide 11: Lower results of the Foundry division due to severe market weakness
Lower results of the Foundry division due to severe market weakness H1 2024 foundry: market downturn tougher than expected Foundry division £m Sequential half-years, H1 2024 H1 2023 H1 24 v H1 23 Change % constant currency underlying ▪ End markets, now including automotive, very weak with Revenue 25
Slide 12: Ongoing innovation pipeline of value-adding products
Ongoing innovation pipeline of value-adding products Flow control Advanced Refractories Foundry Our new high performance ladle slide gate Fully automated gunning robot for Solosil is an environmentally- plate, DuraPlate L-Tech, is designed for a furnace maintenance significantly friendly inorganic b
Slide 13: Growing customer interest in our robotics solutions
Growing customer interest in our robotics solutions Flow Control robotics contracts 2017-2022 ~3 Average # contracts year signed per 2023 5 # contracts signed in period 2024 H1 5 # contracts signed in period New contracts will support increased sales of Flow Control products in the coming years 13
Slide 14: Strategic expansion programme on track to conclude around the end of 2024
Strategic expansion programme on track to conclude around the end of 2024 Expansion capex completed: • Flow Control VISO expansion (Poland and India) • Advanced Refractories – pre-cast capacity in India • Foundry fluxes in China Remaining projects on track for completion in H2 2024: • Flow Control s
Slide 15: Space available for further expansion in India when needed
Space available for further expansion in India when needed Flux, Alsi mono Space for further and Basic mono expansion manufacturing Vizag site 15
Slide 16: Continued progress in safety performance
Continued progress in safety performance Lost-time injury frequency rate* Sustainable safety improvement 1.70 ▪ Maintained our injury frequency rate at around 1.54 the record low level achieved last year 1.42 ▪ Driven by management focus 1.16 • Frequent safety audits by employees and contractors 1.0
Slide 17: First carbon-free manufacturing plant in Brazil
First carbon-free manufacturing plant for Flow Control and Advanced Refractories products, in Brazil Our Rio de Janeiro site is now net zero for Scope 1 and 2 CO2e emissions • Green electricity • Green gas through use of biomethane produced from municipal waste Production facility of Gás Verde, Braz
Slide 18: Financial review
Financial review 18
Slide 19: Market share gains offsetting weaker Foundry end markets
Market share gains offsetting weaker Foundry end markets Group revenue bridge (£m) Foundry volumes negative 995.3 Pricing reflects cost declines 955 (40.1) 955.2 944 (11.4) 936 (7.4) 936.4 Market share gains in Flow Control and Foundry page 19 2023 H1 FX 2023 H1 Volume Price 2024 H1 revenue Reported
Slide 20: RoS improvement despite lower volumes
RoS improvement despite lower volumes RoS: 10.5% 10.3% 10.4% 104.9 Volume impact Steel Foundry Total H1 ‘24 vs H1 ‘23 Revenue +£6.9m (£18.3m) (£11.4m) 98.1 3.4 97.2 Trading profit +£1.7m (£10.6m) (£8.9m) (6.8) (0.6) 5.2 Drop-through 24% 57% NA (8.9) H1 2023 FX H1 2023 Volume Net price Cost savings O
Slide 21: Business broadly stable
Business broadly stable Revenue £m 1200 955.2 923.0 936.5 1000 800 272.8 242.8 250.8 600 Foundry Steel 400 682.5 680.2 685.7 200 0 H1 '23 H2 '23 H1 '24 Trading profit £98.1 £94.1 £97.2 RoS 10.3% 10.2% 10.4% All figures shown on a constant currency basis 21
Slide 22: Income statement
Income statement H1 2024 H1 2023 Change (%) (£m unless indicated) Actual Actual Underlying1 As reported Revenue 936.5 995.3 (2.0%) (5.9%) Trading Profit 97.2 104.9 (0.9%) (7.4%) Return on Sales (ROS %) 10.4% 10.5% +10 bps (20 bps) Post tax Share of JV Results 0.6 0.5 Net Finance Costs (8.0) (5.5) He
Slide 23: Progressing towards our working capital intensity target of 21%
Progressing towards our working capital intensity target of 21% Improving trend in working capital intensity ratio 24.50% 24.00% 24.10% 23.50% 23.40% 23.20% 23.00% 22.50% 22.4% 22.00% Jun-23 Dec-23 Jun-24 12-month average TWC intensity 3-month average TWC intensity Trade working capital (TWC) values
Slide 24: Cashflow impacted by growth capex and seasonal working capital
Cashflow impacted by growth capex and seasonal working capital 140 30.2 120 100 97.2 Cash conversion: 49% 80 (49.9) 60 4.6 47.9 40 (34.2) 17.8 20 (24.8) (5.3) 0 H1 2024 Depreciation Net capex Trade working Other Adjusted Interest and Other Free cash flow trading profit capital operating tax cashflow
Slide 25: Increasing net debt reflecting expansion programme and shareholder returns
Increasing net debt reflecting expansion programme and shareholder returns Net debt bridge (£m) Net debt / 0.9x 1.2x EBITDA 44.2 315.2 17.1 (3.6) 237.5 30.2 7.6 (17.8) Dec-23 Free cash flow RoU acquisitions Share buyback ESOP share Dividends paid FX and other Jun-24 purchases Note 1: Net debt / EBIT
Slide 26: Strong start to our cost savings programme
Strong start to our cost savings programme Cost savings programme fully on track • Expect c. £6m in-year savings in 2024 (upgrade from £3m) • 2024 exit run-rate remains £10 – 15m • Total £30m target by 2026 confirmed Actions planned include: • Further headcount reduction • LEAN processes • Plant aut
Slide 27: Outlook
Outlook 27
Slide 28: Outlook
Outlook ▪ The Group achieved resilient results in H1 despite difficult market conditions, particularly in Foundry ▪ We no longer expect a significant improvement in our end markets in the second half, with recovery most likely only in 2025 ▪ Accordingly, we now expect our full year headline trading
Slide 29: Appendix
Appendix Think beyond. Shape the future. 29
Slide 30: Technical notes and guidance for 2024, HY update
Technical notes and guidance for 2024, HY update ▪ Based on average H1 FX rates, FY23 revenue of £1,929.8m and trading profit of £200.4m would translate to c. £1,878m and £192m respectively ▪ Depreciation c. £65m - £70m ▪ Interest cost c. £14 - 16m (income statement) ▪ Tax - P&L effective rate c. 27
Slide 31: IFRS16 line items
IFRS16 line items H1 2024 H1 2023 FY 2023 Lease liabilities 47.6 41.6 48.2 Interest on lease liabilities 1.5 1.0 2.4 Cash payments for leases (8.4) (8.5) (24.2) NBV of right-of-use assets 56.4 45.6 57.6 Depreciation on right-of-use assets 7.5 6.5 14.2 31
Slide 32: FX impact on trading profit by currency unit and by % change
FX impact on trading profit by currency unit and by % change Change in trading profit % Change in trading Average rate Average rate 30 June 2024 Currency Unit (£m) (approx.) change profit (£m) (approx.) FY23 HY24 rate USD 1 Cent 0.72 1.0% 0.92 1.24 1.27 1.26 EUR 1 Cent 0.01 1.0% 0.01 1.15 1.17 1.18
Slide 33: Think beyond. Shape the future.
For further information, please contact: Rachel Stevens Head of Investor Relations Rachel.stevens@vesuvius.com Think beyond. Shape the future. 33