13th May 2020 12:21
(Alliance News) - Vesuvius PLC on Wednesday said its performance in the first quarter of 2020 improved but warned that trading since then has been significantly hurt as it withdrew its guidance for the year.
The FTSE 250-listed molten metal flow engineering firm - whose annual general meeting is scheduled for Wednesday - said that its first quarter performance was marginally ahead year-on-year despite subdued conditions for its steel industry customers. World steel production fell 1.4% year-on-year in the first quarter, it said, or 4.1% excluding China. Steel production in the US declined by 1%, while weak demand in the eurozone led to production falling by 10%.
However, Vesuvius said that since the end of the quarter, measures imposed by governments to contain the spread of Covid-19 have led to its April sales plunging by 28% when compared to the same month in 2019.
It noted that all its operations have now resumed, and its cost-saving measures, such as the cancellation of its 14.3 pence 2019 final dividend payout, are expected to result in savings of around GBP10 million each quarter starting in the second quarter. It also has reduced its planned capital expenditures by 30% to save GBP20 million, adding to GBP19.4 million of recurring savings from its ongoing restructuring programme.
Vesuvius said it improved its liquidity - which stood at GBP375 million at the end of March - with an additional GBP314 million through the issuance of US private placement notes, as well as accessing the Bank of England's Covid Corporate Financing Facility programme. The note issuance is intended to repay the USD140 million notes which mature in December 2020.
The Covid Corporate Financing Facility is designed to help larger firms in the UK to maintain liquidity amid disruption caused by the Covid-19 pandemic, through the purchase of short-term debt in the form of commercial paper.
"Whilst the extent of the impact of Covid-19 on our business remains uncertain, we are confident that the measures we have taken to aggressively cut costs and preserve liquidity not only ensure that we can operate through a prolonged downturn but also emerge stronger once end markets recover, said Chief Executive Patrick Andre.
Vesuvius stock was trading 7.0% lower at 356.20 pence each at Wednesday midday in London.
By Ife Taiwo; [email protected]
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