Self-help measures have enabled Vesuvius (VSVS) to restore its pricing power and regain market share, says the molten metal-flow engineer's chief executive, François Wanecq. Despite serving depressed end markets, the group's cost-cutting efforts, new products and expansion into developing markets fuelled a 2 per cent increase in adjusted operating profit to £143m.
Those measures buoyed the group's resilient steel division in particular. Ditching lower-margin sales, introducing new products and focusing on Asian markets drove a 106 basis point increase in the division's underlying operating margins to 9.8 per cent. Moreover, stripping out currency fluctuations, acquisitions and disposals, sales rose 4.4 per cent - substantially ahead of world crude steel output, which was up 1.1 per cent.
It was a different story at Vesuvius' foundry unit. Ongoing investment cuts in mining, coupled with a downturn in higher-margin markets such as Brazil, Thailand and Ukraine, sent adjusted operating profits down 10 per cent. But Mr Wanecq reckons his self-help measures mitigated the damage. He also expects changes to management and objectives to help plug further leaks.
Broker Canaccord Genuity expects adjusted pre-tax profit of £135m in 2015, giving EPS of 34.9p (from 31.5p last year).
| VESUVIUS (VSVS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 500p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 500-501p | 12-MONTH HIGH: | 503p | LOW: 389p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 329p* | NET DEBT: | 29% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)† |
|---|---|---|---|---|
| 2011 | 1.69 | 141 | 36.0 | 21.8 |
| 2012 | 1.55 | 17 | -7.0 | 14.3 |
| 2013 | 1.51 | 104 | 38.4 | 15.0 |
| 2014 | 1.44 | 111 | 36.8 | 16.1 |
| % change | -4 | +7 | -4 | +8 |
Ex-div: 9 Apr Payment: 22 May *Includes intangible assets of £704m, or 260p a share †2011 and interim dividend for 2012 relate to Cookson prior to the demerger of Alent | ||||
