A 5.3 per cent uptick in global steel production, and growing demand for high-end steel products, cemented a strong trading year for Vesuvius (VSVS). Even after adjusting for acquisitions and currency movements, revenues and trading profit still surged 12.5 per cent and 16.1 per cent, respectively.
Trading profit would have been even higher, too, had Vesuvius not encountered “significant price increases” for key raw materials and additional shipping costs to the tune of £14.4m. Fortunately, Vesuvius’s restructuring programme swiftly compensated for these challenges, generating £16.2m of savings in 2017, along with ancillary benefits.
Raising interest in value-creating solutions, ramping up R&D investments, speeding up payments from Chinese clients and building its customer base in developing regions spurred better cash generation, wider profit margins and revenue growth in excess of underlying markets across all territories. New boss Patrick André plans to continue implementing these self-help measures in the year ahead, alongside his own restructuring measures, tasked with finding £15m of savings by 2020.
Numis forecasts adjusted pre-tax profit of £170m and EPS of 41.9p in 2018 (up from £152.9m and 40.7p in 2017).
| VESUVIUS (VSVS) | ||||
| ORD PRICE: | 625p | MARKET VALUE: | £1.7bn | |
| TOUCH: | 623-625p | 12-MONTH HIGH: | 633p | LOW: 504p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 47 | |
| NET ASSET VALUE: | 379p* | NET DEBT: | 26% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 1.51 | 104 | 38.4 | 15.00 |
| 2014 | 1.44 | 111 | 36.8 | 16.10 |
| 2015 | 1.32 | 77.4 | 17.6 | 16.28 |
| 2016 | 1.40 | 79.4 | 17.3 | 16.55 |
| 2017 | 1.68 | 97.1 | 13.4 | 18.00 |
| % change | +20 | +22 | -23 | +9 |
| Ex-div: | 12 Apr | |||
| Payment: | 25 May | |||
| *Includes intangible assets of £743m, or 274p a share | ||||
