Refractories producer Vesuvius Plc in March reported a narrow
2% increase in trading profits for the full year 2014 to
£142.8m ($219.4m*), up from £140m a year
ago.
Headline earnings were up by 3% to £90.3m
from £87.7m over the same period, while earnings per
share rose by nearly 5% to £0.334/share for the latest
reporting period from £0.319/share for the full year
2013.
The company’s revenues were down by
4.4% last year, however, to £1.44bn from £1.51bn
the previous year.
"During 2014, we made encouraging progress in
line with our objectives and strategy, against a backdrop of
mixed trading conditions," said Vesuvius’ CEO,
Francois Wanecq.
He said that the company had improved its margins
on the back of "moderate" underlying revenue growth, which was
reported as a positive 3.5% overall, and singled out potential
in Vesuvius’ "addressable markets" in Asia and
China, where the company has recently invested in R&D to
serve local foundry customers.
Sales of steel flow control products were strong
in all regions, the company said in its earnings statement,
while advanced refractories performed well in the Americas and
Asia-Pacific.
Vesuvius also briefly outlined its efforts to
streamline its product portfolio and increase productivity,
with a focus on value-added products and services to help stave
off the effect of price deterioration and market
competition.
"Development of our quality improvement programme
has helped to restore our pricing ability and to regain market
share," Vesuvius said in a presentation accompanying the
results.
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Vesuvius’ CEO, Francois
Wanecq, said he expects this year’s
trading
environment to be broadly flat with 2014 for refractory
products.
Vesuvius
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Steel
Vesuvius pointed to an overall increase in steel
production in major global markets in 2014, with South Korea
posting the strongest growth in output at 7.5%, followed by
India at 2.3% and the North American Free Trade Agreement
(NAFTA) region at 2.1%.
Expansion in China and the Europe, Middle East
and Africa (EMEA) markets was less encouraging, however, at
just 0.9% and 0.5% growth, respectively, while Brazil saw a
0.7% decline in steel production.
The company’s steel flow control
products benefitted from strong automotive demand in the
Americas and sales of fluxes through its Metallurgica arm in
EMEA, pushing revenues up by 1% Vesuvius said. Asia-Pacific
markets were also good performers for steel flow control,
recording a 10.4% increase in sales income.
For its advanced refractories offerings,
Vesuvius’ EMEA revenue was pinched by declines in
Russia and Ukraine, falling by 1.3%, but the introduction of
premium products and solutions in the Americas and Asia-Pacific
delivered sales growth of 5.7% and 17.4%, respectively, in
these regions.
Foundry
Vesuvius said that despite the weakness in
foundry markets in the Americas resulting from reduced foundry
and mining activity in Brazil last year, its sales of foundry
products had outperformed underlying markets, quantified by the
number of metal tonnes cast, in Europe, the US, India and
China, thanks to growth in light vehicle production.
Trading profit for the company’s
foundry division fell by 9.5% last year to £46.4m from
£51.3m in 2013, with revenues down 6.1% to £463m
from £493m over the same period.
Demand from the mining sector, which accounts for
around 7% of Vesuvius’ foundry revenue experienced
"significant difficulties" in 2014, Vesuvius said.
Acquisitions and outlook
In addition to technology investments in China,
Vesuvius recently opened a new R&D facility in the
Netherlands and last year acquired California, US-based Process
Metrix and Brazil’s ECIL Met Tec to expand its
technical services capabilities.
The company also said that it had installed new
management at its foundry arm, Foseco, to restore the
business’ innovation leadership as well as
focusing on cost-cutting and capturing market share in
China.
Vesuvius’ statement did not mention
whether it plans to renew its bid to acquire UK-based rival
Morgan Advanced Materials, after its approach to the company
was rejected without discussion in late 2014.
"We expect the underlying trading environment in
the current year to be broadly similar to that experienced in
2014," Wanecq said. "We are progressing with our plan to
improve operational efficiency across the group and these
actions should drive further improvement in our trading margins
during 2015."
*Conversion made March 2015