Investing.com -- Vesuvius (LON:VSVS), the global specialist in molten metal flow engineering, released a trading update for the first quarter of 2025, stating that the group’s performance was in line with management expectations.
Year-to-date (YTD) sales have been described as "stable," with a slight increase in volume and a modest decrease in prices by 0.5%. The report indicates that Vesuvius has outperformed its peers, gaining market share across all divisions and business units.
The group’s performance in India has been particularly noteworthy, contrasting sharply with its closest listed peer. The first quarter EBITA/Trading Profit was also "broadly in line" with management’s expectations.
The benefits of cost-saving measures were balanced by higher inflation costs, which have made it challenging to pass on prices YTD. However, price increases are now being implemented and are expected to boost performance in the second half of 2025.
From a cash flow perspective, management continues to focus on working capital (WC) intensity. Despite normal seasonal WC patterns resulting in an outflow in the first half of the year, progress is expected towards achieving a WC-to-sales ratio of 22% this year.
During the period, approximately £54m was spent on mergers and acquisitions, as well as share buybacks.
In terms of market commentary, steel markets were described as "subdued," with significant weakness in Europe, Middle East, and Africa (EMEA), which saw a 4% year-on-year decline. North America remained flat, while India continued to be a bright spot with strong growth of 7%. South-East Asia and South America also experienced slight growth.
However, Chinese exports continued to impact the global market, despite showing stability compared to the second half of 2024.
In contrast, foundry end markets were described as "considerably lower" year-on-year, down by 8%, but were broadly stable sequentially. Excluding India, all regions experienced lower activity, with EMEA and North American end markets declining by approximately 10%.
Looking ahead, Vesuvius has revised its full-year 2025 guidance downward. Management now expects Trading Profit to be "slightly below" FY24 (£178.8m after adjusting for foreign exchange) on a constant currency basis.
This change is due to the wider macro environment, a further slowdown in global industrial activity, ongoing end-market softness, and the possibility that cost inflation may not be fully recovered. Interestingly, management now expects the direct impact of tariffs to be neutral.
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