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(Vienna/London) RHI Magnesita, the leading global supplier of refractory products, systems and services, today announces its results for the six months ended June 30, 2020. The company responded swiftly to a very challenging environment due to the COVID-19 crisis. Safe working conditions were established, and liquidity, production and supply chains were maintained. “Conditions in our key markets have been consistent with the assumptions made for our COVID-19 scenario planning work and we have reacted quickly to reduced demand by taking prudent measures to preserve cash and manage costs,” says Stefan Borgas, CEO RHI Magnesita.
- “The response of colleagues across the business to the COVID-19 crisis has been outstanding. As a result of everyone’s efforts, RHI Magnesita has been able to establish safe working conditions, and maintain its production capabilities and supply chains to serve our customers throughout this challenging period,” explains Borgas.
- Prudent measures were quickly taken to preserve cash, including reduced capex and dividend suspension. “Whilst revenues and profits are down materially in the first half of this year, the Group has maintained double digit operating margins and positive operating cash flow,” says Borgas.
- Activity levels are likely to remain subdued in Q3, with limited visibility into Q4. The strategy of RHI Magnesita remains on track and we have extended a number of our key initiatives to further improve, for the longer term, our overall cost effectiveness. These initiatives, reducing SG&A and further consolidating our production network, will support the profitability in both H2 2020 and beyond.
- The long-term economic impact of COVID-19 remains uncertain. However, the business is taking appropriate actions to ensure it is able to manage effectively through an extended period of subdued demand. With significant financial strength, RHI Magnesita is well equipped to take advantage of growth opportunities when markets improve and will exit this period of disruption with positive strategic momentum.
- Short term cost savings measures were executed successfully by reducing selling and administrative costs by €25 million in Q2 2020, with a similar level of savings expected in H2 2020.
- The strategy remains further on track with key initiatives extended to further improve cost effectiveness:
- Production Optimisation Plan is on track, and opportunities to expand the scope have been identified.
- Additional SG&A run-rate savings were identified of €10 million in 2020 and €30 million in 2021.
- Internal raw material sourcing has been reviewed to maximise quality and cost advantage.
Financial Highlights
- Revenue decreased by 22.7% at constant currency, reflecting the impact of COVID-19 on customer demand
- Steel revenue decreased by 22.4%
- Industrial revenue decreased by 23.5%
- Robust adjusted EBITA margin performance of 11.4%
- Refractory margin of 9.1% in H1 2020 (H1 2019 9.5%)
- 2.3% margin contribution from backward integration, despite further falls in raw material prices
- Positive operating free cash flow of €93 million (H1 2019 €129 million)
- Stable net debt of €666 million (H1 2019: €669 million and FY 2019: €650 million) and strong financial position with liquidity of €1.1 billion
Outlook
Conditions through Q2 have been consistent with the Group’s COVID-19 planning assumptions and activity levels expected to remain subdued into Q3, with limited visibility thereafter. The strategy remains unchanged with appropriate actions implemented to ensure that the business can manage effectively through an extended period of subdued demand. While efficiency initiatives will support profitability in H2 and beyond, the strong financial position ensures that the Group is well equipped to take advantage of growth opportunities when markets improve.
Read the full RNS here.
About RHI Magnesita
RHI Magnesita is the leading global supplier of high-grade refractory products, systems and solutions which are critical for high-temperature processes exceeding 1,200°C in a wide range of industries, including steel, cement, non-ferrous metals and glass. With a vertically integrated value chain, from raw materials to refractory products and full performance-based solutions, RHI Magnesita serves customers around the world, with around 13,000 employees in 35 main production sites and more than 70 sales offices. RHI Magnesita intends to leverage its leadership in terms of revenue, scale, product portfolio and diversified geographic presence to target strategically those countries and regions benefitting from more dynamic economic growth prospects.
Its shares have a premium listing on the London Stock Exchange (symbol: RHIM) and are a constituent of the FTSE 250 index. For more information please visit: www.rhimagnesita.com
For further enquiries, please contact:
Investors:
Guy Marks, Head of Investor Relations
+44 (0) 7932 013 357
guy.marks@rhimagnesita.com
Media:
Patrizia Pappacena, Vice Spokesperson
+43 699 1870 6443
patrizia.pappacena@rhimagnesita.com
