- 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 (¢)|
|£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