Slide 1: Full Year 2023 Results
Full Year 2023 Results 29 February 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: Robust results despite difficult markets
Robust results despite difficult markets Revenue Trading profit Return on sales Free Cash-Flow £1929.8m £200.4m 10.4% £128.2m (3.1%) (6.7%) (40bps) +4.1% vs. 2022 Underlying change Underlying change Underlying change (5.7%) (11.8%) (70bps) Reported change Reported change Reported change Headline EPS
Slide 6: Strong operational performance and robust delivery in 2023 despite difficult market
Strong operational performance and robust delivery in 2023 despite difficult market ▪ Solid pricing strategy in all Business Units ▪ Market share gains in Flow Control and Foundry ▪ Productive R&D process and new products pipeline • 21 new product launches in 2023 • New Product sales increased to 17
Slide 7: 2023 steel production lower than 2022 in all major regions except India
2023 steel production lower than 2022 in all major regions except India Crude steel production growth in % ▪ Renewed weakness of steel markets India in H2, in particular in Europe ▪ India remains very dynamic with North America EEMEA excl. Iran, Russia and Ukraine growth accelerating China Turkey ▪
Slide 8: Flow Control volume growth outperformed the market in most major regions
Flow Control volume growth outperformed the market in most major regions Vesuvius FC sales volume growth FY23 India China South America. EEMEA excl. Iran, Russia and Ukraine South East Asia USA EU27+UK Crude steel production growth FY23 Size of bubble proportionate to the sales of FC division Dotted
Slide 9: Steel division: strong performance in Flow Control
Steel division: strong performance in Flow Control ▪ Revenue growth (underlying) in Flow Control despite the Change Underlying change Steel Division (£m) 2023 2022 difficult market conditions (%) (%) Flow Control 793.0 810.9 (2.2%) 0.6% • good pricing performance Advanced Refractories 567.9 645.3 (1
Slide 10: Foundry markets: short-term weakness in general industrials markets outweighed improvement in automotive
Foundry markets: short-term weakness in general industrials markets outweighed improvement in automotive China EU+UK North America South America North Asia India Vesuvius end-market exposure General industrials market 2023 vs 2022 22% Auto market 2023 vs 2022 10% 17% 8% 9% 9% 78% 35% Foundry share o
Slide 11: Foundry Division: progression slowed down by short-term market weakness in H2
Foundry Division: progression slowed down by short-term market weakness in H2 ▪ Good H1 and a difficult H2 Change Underlying change Foundry 2023 2022 (%) (%) • Significant market weakness in the northern part of EMEA (Germany), South America and China Revenue 529.8 551.0 (3.8%) (1.5%) • Negative imp
Slide 12: Pricing and market share gains supported by new products launched in 2023
Pricing and market share gains supported by 21 new products launched in 2023 - more to come in 2024 and beyond Flow control Advanced Refractories Foundry New isostatic liner for high-purity New Supermatrix bricks for greater Duratek Supermelt crucible: longer life steel stability and performance cru
Slide 13: Increased penetration of our innovative and customised robotics solutions
Increased penetration of our innovative and customised robotics solutions ▪ Following North Asia, South America and China, we are now converting customers in India and North America to our unique robotic technology for continuous casting • First installation of robot on continuous caster in India •
Slide 14: Continuous improvement in R&D spend and efficiency to support pricing performance and market share gains
Continuous improvement in R&D spend and efficiency to support pricing performance and market share gains Consistent, growing investment in R&D Steadily growing new product sales(*) % £37.4m £36.1m £31.4m > 20% 17.6% 16.4% 15.3% 2021 2022 2023 2021 2022 2023 2026 target R&D investment (constant curre
Slide 15: Strategic growth capex on track to expand capacity in Flow Control and in Asia
Strategic growth capex on track to expand capacity in Flow Control and in Asia Flow Control expansion worldwide Expansion in Asia for all business units Flow Control Advanced Refractory Foundry • Basic monolithics expansion in Vizag • VISO capacity •VISO capacity expansion in Mexico (India) • Non-fe
Slide 16: Continuous progress in our sustainability agenda
Continuous progress in our sustainability agenda 0.5 20% CO2e intensity reduction v. 2019, two years ahead of schedule 0.45 On track for 50% reduction by 2035 and net zero by 2050 0.4 -20% CO2e (Scope 1+2) / tonne product shipped 0.35 0.3 0.25 2035 target: -50% 0.2 0.15 0.1 0.05 2050 target: Net zer
Slide 17: Best-ever safety performance in 2023
Best-ever safety performance in 2023 Lost-time injury frequency rate* 1.8 ▪ Strong and continuous progress in safety culture 1.7 1.6 1.5 ▪ Systematic approach to risk identification 1.4 1.4 ▪ Vesuvius now becoming a benchmark and 1.2 support for many steel and foundry customers 1.2 1.1 1.1 worldwide
Slide 18: Financial Review
Financial Review 18
Slide 19: Revenue -3% (underlying) reflecting good pricing performance in difficult market conditions
Revenue -3% (underlying) reflecting good pricing performance in difficult market conditions Group revenues bridge (£m) 2,047 1,992 -55 1,992 +47 1,930 1,883 -109 1,883 ▪ c. 90%due to market contraction and destocking (both refractory consumables and customer end product) ▪ c.10% due to market share
Slide 20: Resilient trading profit
Resilient trading profit Robust pricing partially compensating for a challenging volume environment RoS RoS (£m) 11.1% 10.4% 227.2 214.7 -12.5 214.7 32.1 5.5 200.4 -3.5 194.9 194.9 166.3 -48.4 166.3 2022 FX 2022 trading Volume Net price Cyber Other one-offs 2023 Reported Reported profit (constant tr
Slide 21: Income statement
Income statement 2023 2022 Change (%) (£m unless indicated) Actual Actual As reported Underlying1 Revenue 1929.8 2047.4 -5.7% -3.1% Trading Profit 200.4 227.2 -11.8% -6.7% Return on Sales (ROS %) 10.4% 11.1% -70 bps -40 bps Post tax Share of JV Results 0.9 1.2 Net Finance Costs -11.6 -11.4 Headline
Slide 22: Excellent cash conversion
Excellent cash conversion £m Cash conversion 93% despite significant investment in growth capex +20.3 +57.8 Capex split: c. £35m industrial stay-in-business c. £25m customer installations, sustainability and IT c. £30m special growth projects c. £5m asset disposals 200.4 200.4 191.3 -87.2 -4.7 186.6
Slide 23: Working capital improving in all categories, particularly in H2
Working capital improving in all categories, particularly in H2 £m £m 480 350 323.9 306.1 296.2 471.1 300 470 250 460 Dec 2022 June 2023 Dec 2023 Inventory 450 441.1 440 400 397.4 430 380 367.3 364.6 420.3 360 420 340 Dec 2022 June 2023 Dec 2023 410 Trade debtors 400 260 250.2 390 240.5 Dec 2022 Jun
Slide 24: Strong balance sheet – supporting both growth and capital returns
Strong balance sheet – supporting both growth and capital returns Net debt/EBITDA stable at 0.9x £m 255 11 238 61 31 11 53 3 187 Net debt Adjusted Net interest Income FX Right-of-use Dividends Other Net debt at year end operating taxes impact asset additions paid at year end 2022 cash flow (leases)
Slide 25: Operational efficiency programme
Operational efficiency programme As announced at our Capital Markets Event in November 2023: • We are putting in place a programme targeting at least £30m recurring cash savings by 2026 • Source of savings • Lean / continuous improvement programmes • Further optimisation of manufacturing footprint •
Slide 26: Outlook
Outlook 26
Slide 27: 2024 outlook
2024 outlook Current trading and outlook for 2024 “In line with the end of 2023, the activity level of both our Steel and Foundry markets remained subdued at the beginning of the year. However, we expect some improvement in market activity as the year progresses, consistent with external forecasts.
Slide 28: Our mid-term ambition level remains unchanged
Our mid-term ambition level remains unchanged Positive growth Vesuvius to Profitability Strong and recurring trends in the outperform the (RoS) targeted to free cash flow steel and foundry underlying markets exceed 12.5% in generation of £400m markets thanks to its 2026 (2024 to 2026) due to technol
Slide 29: Appendix 1: technical and additional information
Appendix 1 technical and additional information Think beyond. Shape the future. 29
Slide 30: Technical notes and guidance for 2024
Technical notes and guidance for 2024 ▪ Based on FX rates as at 28 February 2024, FY23 revenue of £1929.8m and trading profit of £200.4m would translate to c. £1,875m and c. £191m respectively, a headwind of c. £55m to revenue and £9m to trading profit • see table overleaf, showing impact of a movem
Slide 31: 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 YE rate Current Spot Currency Unit (£m) (approx.) change profit (£m) (approx.) FY22 FY23 31 Dec 2023 (28 Feb 2024) USD 1 Cent 0.77 1.0% 0.95 1.24 1.24 1.27 1.27 EUR 1 C
Slide 32: Financial summary (reported)
Financial summary (reported) 2023 2022 Year-on-year Underlying (£m) (£m) change change (1) Revenue 1,929.8 2,047.4 -5.7% -3.1% Trading Profit (2) (EBITA) 200.4 227.2 -11.8% -6.7% Return on Sales (2) 10.4% 11.1% -70bps -40bps Operating Profit 190.1 216.8 -12.3% Headline Profit Before Tax (2) 189.7 21
Slide 33: 5 year history at constant currency
5 year history at constant currency 2019 2020 2021 2022 2023 Revenue (£m) 1,630.1 1,417.3 1,671.2 1,992.1 1,929.8 Steel 1,147.8 1,022.9 1,199.2 1,454.5 1,400.0 Foundry 482.3 394.4 472.0 537.7 529.8 Trading Profit (£m) 166.1 93.2 139.0 214.7 200.4 Steel 112.5 72.0 101.1 163.2 147.6 Foundry 53.6 21.2
Slide 34: Appendix 2: Capital Markets Event extracts
Appendix 2 Capital Markets Event extracts Think beyond. Shape the future. 34
Slide 35: Vesuvius: A profitable organic growth strategy
Vesuvius: A profitable organic growth strategy 1 2 3 4 Positive growth trends Vesuvius outperforms Profitability (RoS) target Strong and recurring in the steel and foundry the underlying markets to exceed 12.5% in 2026 free cash flow markets thanks to its technology- as a result of: generation due t
Slide 36: Vesuvius provides technologically differentiated solutions to our steel and foundry customers
Vesuvius provides technologically differentiated solutions to our steel and foundry customers World >95% sales Leading from high- Safety Improvements in customer R&D technology plants consumables Value WASCO creation Quality Better steel, better castings for steel and VARG foundry Efficiency Cheaper
Slide 37: Positive inflection point in steel production outside of China
Positive inflection point in steel production outside of China More than 200m tonnes of steel production growth outside of China in the next 10 years Evolution of steel production (2012-2032e), MT • Strong growth of steel production and 1,975 consumption in India and RoW 1,885 181 293 ROW • Moderate
Slide 38: Faster growth of high-tech steel, in particular thin slab casting, supporting Flow Control outperformance
Faster growth of high-tech steel, in particular thin slab casting, supporting Flow Control outperformance XX = CAGR, % High tech steel Commodity steel Global steel production evolution, MT (%) High technology steels +0.5% 1,975 +0.8% 1,885 Produced through technologically advanced process 1,828 rout
Slide 39: Most foundry end-markets are growing in volume at around 2% per annum
Most foundry end-markets are growing in volume at around 2% per annum Vesuvius foundry end-market sales, % 2022 sales & %CAGR(*) 77% of Vesuvius Foundry sales are in markets Mitigation: Light Accelerated penetration with positive volume growth vehicles ~2% CAGR of non-ferrous castings General Engine
Slide 40: The Vesuvius business model: geared for profitable growth
The Vesuvius business model: geared for profitable growth Leading R&D strategy Superior pricing Differentiated products & profitability and solutions Market share gains target: Efficiency >12.5% RoS Continuous improvement of Focus on cost manufacturing cost base in 2026 competitiveness Decentralised
Slide 41: Relentless focus on cost optimisation
Relentless focus on cost optimisation Lean and continuous improvement programmes c. 75% benefit Automation and digitisation of manufacturing More than £30m and administrative processes of operational efficiency gains targeted by 2026 Further optimisation of manufacturing footprint c. 25% (Cost: ~£40
Slide 42: Targeting higher profitability and cashflow generation
Targeting higher profitability and cashflow generation Target of improved profitability (return on sales) Market share gains drive revenue Leading growth >12.5% Technology 10.0% ~2% per annum outperformance of underlying markets in Flow Control and Foundry 2023 (consensus*) 2026 Strong free cash flo
Slide 43: We have a target to achieve a return on sales margin of at least 12.5% in 2026
We have a target to achieve a return on sales margin of at least 12.5% in 2026 ▪ We are targeting medium-term average revenue growth of at least c.4%, based on Our path to reach our target of 12.5% in 2026 • Assumed market growth of c. 2% p.a. >12.5% • Outperformance of c. 2% pa. through market shar
Slide 44: Our business model delivers consistently growing cashflows
Our business model delivers consistently growing cashflows Vesuvius is consistently cash generative ▪ Our business model generates highly resilient positive £m 200 cash flows: 150 • Low capex intensity / asset light (no mining integration) 100 • High level of recurring revenue created from a consuma
Slide 45: Cash will then be available for further investment or returns to shareholders
Cash will then be available for further investment or returns to shareholders c. 50% dividends Target at least £400m free cash flow(*) to be generated from 2024 – 2026 c. 50% for acquisitions and / or additional shareholder returns (*) Free cash flow: Cashflow from operations after working capital m
Slide 46: Capital allocation priorities
Capital allocation priorities Organic • Consistent and targeted R&D expenditure of c. 2% of revenue per annum investment • Capex expected to return to sustaining levels in 2025 • Sustaining capex of c. £65m per annum based on c. £40m maintenance plus £30m for IT, automation, sustainability and custo
Slide 47: Conclusion
Conclusion Topline growth Margin target of Strong cash Capital allocation medium term 12.5% achieved generation focused on value c. 2% market in 2026 delivering at least creation and growth and c. 2% £400m between shareholder outperformance 2024 and 2026 returns 47
Slide 48: 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. 48