- Adjusted operating profit declined by 38 per cent at constant currencies in 2020
- But net debt has also come down by a tenth
Reflecting the pandemic-driven decline in steel and cement production, refractory products specialist RHI Magnesita (RHIM) saw its adjusted operating profit drop almost two-fifths at constant currencies in 2020, to €260m (£223m).
Demand picked up towards the end of the year with momentum carrying over into the first quarter of 2021. But RHI has warned that the short-term and concentrated increase in demand has led to additional costs, particularly amid the surge in freight rates and shortage of shipping containers.
Still, on the back of more than €100m of free cash flow, net debt has fallen by a tenth to €582m. Having reinstated its dividend in November, the group has declared a final payout of 100¢ per share and is undertaking a €50m share buyback programme.
RHI says that its adjusted operating profit in 2021 should be in line with company-compiled analyst consensus of €310m, although this would still be down from its 2019 profit of €408m. But its shares have rebounded strongly over the past year and its cost cutting plans should help bolster margins until its end markets recover. Buy.
| RHI MAGNESITA (RHIM) | ||||
| ORD PRICE: | 4,122p | MARKET VALUE: | £ 2.0bn | |
| TOUCH: | 4,120-4,124p | 12-MONTH HIGH: | 4,288p | LOW: 1,419p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 94 | |
| NET ASSET VALUE: | 1,334¢* | NET DEBT: | 87% | |
| Year to 31 Dec | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016** | 1.65 | 106 | 186 | 75 |
| 2017 | 1.95 | -5.90 | -43.0 | 75 |
| 2018 | 3.08 | 246 | 352 | 150 |
| 2019 | 2.92 | 200 | 282 | 50 |
| 2020 | 2.26 | 41.5 | 51.0 | 150 |
| % change | -23 | -79 | -82 | +200 |
| Ex-div: | 10 Jun | |||
| Payment: | 30 Jun | |||
| £1 = €1.16, *Includes €377m in intangible assets or 777¢ a share, **Pre-merger of RHI and Magnesita | ||||
Last IC View: Buy, 2,586p, 5 Aug 2020
