With the performance materials division hived off last December, the remainder of Cookson, now under the volcanic moniker Vesuvius (VSVS), depends almost entirely on demand from the steel and foundry industry for its pipes, valves and furnace linings. That explains why underlying operating profits slumped by over a fifth last year to £150m and why management is warning that conditions are unlikely to improve until the second half of 2013. Still, at least the non-core precious metals division is almost sold and the loss-making solar crucibles business is being shut down.
China is driving global steel production, but it makes mostly long steel used in reinforcing bars for building projects. That's worth much less to Vesuvius, which is why China accounts for less than a tenth of the company's steel revenues. High-resistance flat steel pressed for cars, pipes and packaging is worth three times as much, but China's conversion will take time. Vesuvius's steel profits tumbled 22 per cent to £84m in 2012.
Its foundry operations did even worse after China and India spent less on infrastructure and Europe's car industry hit the skids. Profits slumped 36 per cent to £49m, which includes a £10m loss at the solar panels business.
JPMorgan expects adjusted pre-tax profit of £114.6m and adjusted EPS of 29.6p in 2013 (from £111m and 27.5p last year).
VESUVIUS (VSVS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 367p | MARKET VALUE: | £1.02bn | |
| TOUCH: | 366.8-367.4p | 12-MONTH HIGH: | 402p | LOW: 252p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | na | |
| NET ASSET VALUE | 302p* | NET DEBT: | 34% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)† |
|---|---|---|---|---|
| 2011 | 1.69 | 141.4 | 36.0 | 21.8 |
| 2012 | 1.55 | 18.4 | -6.6 | 17.0 |
| % change | -8 | -87 | -118 | -22 |
Ex-div: 15 May Payment: 27 Jun *Includes intangible assets of £764m, or 274p a share †Both 2011 dividends and the 7.5p half-year dividend for 2012 relate to Cookson, prior to the demerger of Alent | ||||
