22nd Oct 2020 11:48
(Alliance News) - Refractory products manufacturer RHI Magnesita NV on Thursday re-instated its 2020 guidance and dividend, and said that third-quarter trading was similar to the previous quarter, reflecting continued stability in markets.
Encouragingly, the order book improved steadily in the third quarter of 2020 "but still slowly", the FTSE 250-listed company said. With the exception of the Industrial Projects business, the company now has stronger visibility to the beginning of 2021.
Due to the resilient underlying cash generation, strength of the balance sheet and improving confidence in the market outlook, RHI Magnesita reversed its previous stance and declared an interim dividend of EUR0.50 per share, in line with the 2019 interim dividend.
Back in August, when announcing its interim results, the company had said it wouldn't pay an interim dividend due to economic uncertainty.
RHI Magnesita anticipates 2020 adjusted earnings before interest, tax and amortisation to be in line with current market expectation of EUR248 million, helped by the company's "clear strategy" and benefits of ongoing business improvement initiatives. In 2019, the company reported adjusted Ebitda of EUR408 million, so the 2020 result will be down 39%.
As part of ongoing cost savings initiatives, RHI Magnesita intends to close up to 10 sites by the first half of 2022, increasing savings to EUR100 million by 2022. The total capital expenditure for the strategic cost savings initiatives is estimated at EUR160 million by 2022, with exceptional restructuring costs of EUR100 million and impairments of EUR110 million.
The company said it currently has liquidity of EUR1.1 billion, no material debt maturity before 2023 and significant headroom under its net debt to earnings before interest, tax, depreciation and amortisation covenant.
Shares were up 1.6% at 2,858.00 pence each in London on Thursday morning.
By Tapan Panchal; [email protected]
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