RHI Magnesita NV on Tuesday said trading in the third quarter was in line with expectations, and that demand may improve next year despite continuing market weakness.
The Vienna-based supplier of refractory products said adjusted earnings before interest, tax, depreciation and amortisation in the third quarter of 2023 were similar to those in the first half year. Lower sales volumes and under-absorption of fixed costs were offset by mergers & acquisitions plus ‘strategic initiatives’.
RHI added that its Ebita margin decreased slightly to 11.2% from 11.6% in the previous six months.
RHI said it continued to generate strong organic operating cash flows from its base business, although M&A increased its net debt by around €430 million. It has completed nine acquisitions in the last two years, its latest being that of P-D Refractories in early October.
Excluding M&A, RHI expects full-year sales volumes to be up to 5% lower than last year. Accordingly, volume performance in the quarter ‘reflected normal seasonal factors’ and plants were operating at average 70% capacity.
‘I am pleased by the strong execution demonstrated by RHI Magnesita during difficult conditions for our key end markets,’ commented Chief Executive Officer Stefan Borgas. ‘We are currently benefitting from the strategic investments we have made in reducing our cost base and rationalising our production network, together with improved planning and careful management of our assets through this period of weaker demand.’
RHI increased its full-year adjusted Ebita guidance to at least €380 million from €360 million, expecting operational efficiencies and M&A benefits to offset weak demand and support earnings into next year.
RHI does expect that weakness to lessen somewhat in 2024, observing ‘limited signs of recovery in demand volumes’ thanks to order book visibility being ‘at normal levels’. However it said demand in the autos market is still below pre-Covid levels, and that global construction activity remains weak.
RHI Magnesita shares were up 2.7% at 2,558.00 pence on Tuesday morning in London.
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