24th Oct 2019 08:53
(Alliance News) - RHI Magnesita NV on Thursday warned that continued deterioration in steel-sector sales volumes and lower recovery of costs amid reduced plant utilisation will result in a 4% to 6.5% drop in annual adjusted earnings before interest, taxes and amortisation.
RHI Magnesita shares in London were down 3.4% at 3,512.00 pence each Thursday morning.
The company - which supplies refractory materials, or heat-resistant materials, to the steel industry - said ongoing strong performance of its Industrial division and self-help initiatives have been unable to offset falling Steel unit sales and lower fixed-cost recovery from reduced plant utilisation.
As a result, RHI Magnesita is predicting 2019 adjusted Ebita to be between EUR400 million and EUR410 million, down from the EUR428.1 million recorded in 2018.
The Vienna, Austria-headquartered company said Steel revenue for the three months to September 30 has fallen 14% year-on-year and a materially lower contribution from the Steel unit in second half against the first half is now expected.
The global steel market has weakened further and, as a result, customers have significantly reduced their refactory products inventories, RHI Magnesita explained.
The company said however that its Industrial unit has continued its strong performance seen in first half into the third quarter, with its order book remaining robust and project visibility extending into 2020. The Industrial unit comprises of cement, glass and paper & pulp businesses.
RHI Magnesita, as part of its long-term strategy, has started to implement further cost savings initiatives and optimise its business operations, details of which will be provided at the company's Capital Markets Day on November 14, it said.
The company also remains on track to realise cost savings of at least EUR90 million in 2019 and EUR110 million by 2020 from the integration of RHI with Magnesita.
In October 2017, RHI AG merged with Magnesita, a Brazilian competitor, and then abandoned its listing on the Vienna Stock Exchange and instead secured a listing on the London Stock Exchange as RHI Magnesita.
By Tapan Panchal; [email protected]
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