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RHI Magnesita half year results 2019: robust performance despite difficult end markets

Aug. 12, 2019 - RHI Magnesita, the leading global supplier of refractory products, systems and services announces its results for the six months ended June 30, 2019. “I am pleased to announce a robust financial performance in the first half of 2019,” says Stefan Borgas, CEO RHI Magnesita. “Despite difficult end markets, we have seen a very strong performance from our Industrial Division, offsetting a slightly softer performance from the Steel Division in more challenging market conditions.”

1. The uncertainty in the steel markets is increasing. The results show lower volumes and a selective market share loss in Steel in Europe and North America, partly driven by customer destocking after a strong 2018. “Against this backdrop, we have seen the benefits of both our geographic and market diversification, as well as the strength of our operating platform. As a result, these challenges have so far been offset by our strategic initiatives. These include the benefits generated by our growth strategies, particularly in the Industrial Division and across Asia, as well as our ability to secure price increases,” explains Borgas.

2. Growth markets continue to perform strongly. In China, RHI Magnesita won its first major solutions contract alongside revenue growth of 17%. The Indian revenue grew by 16%.

3. The company shows good margin performance, despite less supportive raw material backdrop.

4. The expected additional €20 million synergy benefit for 2019 is firmly on track. Improvement plans to recover €20 million in 2019 of the €40 million operating underperformance during 2018, relating to four plants, are progressing in line with expectations. Some working capital expansion in H1 2019 is expected to be partly recovered by year end.

Financial Highlights

1. Revenue of €1,541 million increased by 2.2% against the comparative period (H1 2018 €1,508 million), reflecting the strength of the US dollar and a strong performance from the Industrial Division, alongside a weaker performance in the Steel Division

2. Adjusted EBITA increased by 12.3% to €234 million (H1 2018 €209 million), driven by the further realization of synergies (€10 million in H1 2019) and strength of the Industrial Division

3. Continued adjusted EBITA margin progression to 15.2%, up 140bps from prior year (H1 2018 13.8%) in line with our strategy

4. Operating free cash flow of €129 million (H1 2018 €136 million) resulting from EBITA growth, offset by working capital outflow of €118 million, particularly accounts receivable and accounts payable

5. Strong financial position maintained with net debt at 1.1x EBITDA (FY 2018 1.2x), after making final €45 million payments in respect of the acquisition of Magnesita and the €58 million impact of IFRS 16 lease accounting

6. Interim dividend of €0.50 per share announced, in line with the Board’s progressive dividend policy


In the second half of 2019, RHI Magnesita expects the current market uncertainty   to continue, which with poor visibility, there is the possibility of reduced customer inventories.  “However, the self-help measures at our disposal, the initial benefits of the price rise program announced in April and the momentum in our Industrial Division underpin our confidence in further progress. Consequently, management expectations for the full year operating results remain unchanged,” says Borgas.

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