Vesuvius (VSVS) operates as a specialist in molten metal flow engineering, helping its customers to improve manufacturing processes, product quality and reducing energy consumption. The group has also shown itself to be adept at creating its own self-help measures - cost cutting and focusing on higher-margin products - which is good news because market conditions in the first half of the year have remained tough.
Trading in the foundry division was affected by continued reduction of investment in the mining sector, and revenue was down by 5.8 per cent at £226m. However, the margin improvements implemented by the new management team boosted underlying trading profits by 14.6 per cent. The steel division was hit by a number of headwinds including a 2 per cent drop in world crude steel production and a general inventory reduction in the supply chain. Underlying revenue slipped by 5.4 per cent to £476m, trimming underlying profits by nearly 12 per cent and lowering trading margins from 68 basis points to 9.2 per cent.
Vesuvius has started to implement a restructuring programme across the group's activities that will cost around £20m in 2015 and 2016, but will create savings of £10m a year in 2017. Trading in the second half is not expected to show much change from the first half, while sterling's current strength could have an impact on dollar-denominated earnings.
Analysts at Bank of America Merrill Lynch expect pre-tax profits of £93m for the full year, giving EPS of 24p, from £111m and 35.5p in 2014.
| VESUVIUS (VSVS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 413.3p | MARKET VALUE: | £1.12bn | |
| TOUCH: | 412.9-413.9p | 12-MONTH HIGH: | 530p | LOW: 386p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 325p* | NET DEBT: | 34% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 730 | 54.9 | 14.2 | 5 |
| 2015 | 703 | 51.4 | 13.0 | 5.15 |
| % change | -4 | -6 | -8 | +3 |
Ex-div: 13 Aug Payment: 25 Sep *Includes intangible assets of £678m, or 250p a share | ||||
