27th Mar 2019 08:32
LONDON (Alliance News) - RHI Magnesita NV on Wednesday reported a swing to a profit in 2018 amid a sharp rise in revenue, and the company has returned to paying a dividend as it continues its merger plans.
In 2018, the refractory product manufacturer swung to a pretax profit of EUR246.0 million from a EUR5.9 million loss in 2017.
The company's revenue increased 58% to EUR3.08 billion from EUR1.95 billion.
The revenue growth was attributed to increased sales volumes and commercial and raw material pricing increases. RHI Magnesita's Steel division reported 15% growth in revenue to EUR2.20 billion with the company's Industrial division seeing 33% revenue growth to EUR877 million.
"This was our first full financial year as a new company and I am delighted by the significant amount that we have achieved. Underpinned by the strength of the markets in which we operate, we have reported very strong financial results, successfully delivered on our integration plans and benefited from the synergies of the combination," said Chief Executive Stefan Borgas.
The refractory products firm was created in the merger of RHI AG and Magnesita Refratarios SA in 2017.
The company declared a EUR1.50 dividend for 2018, having paid nothing in 2017, and going forward will look to increase its dividend payments.
In 2018 the company achieved EUR70 million of synergies as it continued its "successful integration". RHI Magnesita expects a further EUR20 million in 2019 and EUR110 million in 2020.
Looking ahead, RHI Magnesita is expecting a "more stable" raw material market in 2019, with pricing set to ease. A new higher base price "looks likely", however, due to the "structurally changed environment", particularly in China
Borgas added: "Whilst some uncertainties exist in the macroeconomic outlook for 2019, robust customer markets in the medium term, albeit with some uncertainty in the short term, and positive trends in raw material pricing support our confidence in further growth, underpinned by our strategy. We expect to deliver modest organic revenue growth, with improved operating margins from 2018 levels, driven by continued synergy generation and further optimisation initiatives."
Shares in RHI Magnesita were up 0.9% Wednesday morning at 4,540.00 pence each.
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