- Engineer sees full year towards top of forecast range
- Stock jumps nearly 8%, but remains 25% off 2022 start
- Technology providing pricing power lever
Molten metal flow engineering group Vesuvius (VSVS) is showing a surprising ability to pass on higher input costs, although it still warned that end markets weakness is likely to remain a feature through the rest of 2022.
The FTSE 250 company told investors in a trading update that business in May and June had been ‘stronger than anticipated’, but warned that weakness in its end markets will continue into the second half.
The molten metal flow engineer expects to post a first-half trading profit (earnings before interest, tax and amortisation) of £127.4 million when it announces its results on 28 July.
Full year expectations range from £155 million to £199 million of EBITA, based on forecasts compiled by Vesuvius, and the company sees its performance coming towards the top of that range.
‘Our outperformance in the first half was due to the successful implementation of our pricing strategy to recover input costs as well as market share gains, supported by our technological differentiation,’ it said in the update.
SHARE PRICE SURGE
That saw shares in the company surge in trading on 25 July, rallying nearly 8% to 348p, coming off 284p lows earlier this month. The stock remains around 25% off where it started the year.
But Vesuvius knows that the coming months remain laced with uncertainty and was clear in its warning to investors. An ongoing shaky geo-political environment and potential macroeconomic weakness could leave the second half performance exposed.
‘Due to this uncertainty, our expectations for trading in the second half of the year, including a material drop in volume compared to H1 and challenging cost inflation, remain broadly unchanged,’ it said.
