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Foundry Daily News

19. November 2015

Vesuvius plc - Trading Update

Vesuvius plc, a global leader in molten metal flow engineering, releases the following Trading Update covering trading in the period from 1 July to 18 November 2015.

SUMMARY

Since the announcement of our 2015 Half Year results in July, the Group continues to experience headwinds in trading performance due to the ongoing deterioration in global steel and foundry markets.

Our sales for the year to the end of October are 5.2% below the corresponding period last year at constant currency. However thanks to our ongoing self-help actions, we have maintained margins broadly similar to last year. This resilience to the adverse trading environment reflects our strategic progress and the mitigating actions of the restructuring programme announced earlier this year. These restructuring initiatives are being enhanced and, as outlined previously, we expect to see some early benefit in our 2015 results. The integration of Sidermes within our Technical Services business has progressed well, and we continue to look for opportunities in developing markets and to build our Technical Services offering to capture these important medium-term growth areas.

STEEL

The challenges the global steel market has faced in recent months have been well documented. Global steel production for the year to date to September was 2.4% lower compared to the same period last year, as reported by the World Steel Association1. Although we saw growth in India, this was offset by a decline in China and EMEA and the continuing reduced levels in US production volumes.

Softening economic growth in China has lowered domestic steel demand with a resultant increase in export volumes to c.110 million tonnes on an annual basis. The cheaper price of these Chinese exports has increased pressure on other steel producers but as previously noted, anti-dumping trade tariffs are being imposed in various countries, and according to industry experts should provide more protection for steel producers in those jurisdictions going forward. Steel producers have also taken measures to preserve cash by destocking inventories, reducing purchases of consumables, curtailing production volumes and either mothballing or closing the least profitable plants. Steel producers in the US and UK have been hit particularly hard due to the strengthening of the US dollar and Sterling, coupled with weakening demand from the oil and gas industry. This destocking effect has amplified the decline in demand for Vesuvius products over the year.

FOUNDRY

Market conditions in the global foundry industry have remained challenging, particularly in mining in the US, Brazil and Australasia. Although there has been some improvement over the quarter in light vehicle production, most notably in North America and Europe, steel foundries principally servicing capital equipment continue to be affected by the reduction in capital expenditure in all of our major markets.

FINANCIAL POSITION

We continue to operate with a strong balance sheet and remain strongly cash generative. There has been no material change in our financial position from that reported in our Half Year results on 31 July 2015. The strengthening of Sterling during the year continues to impact the translation of our results, however the foreign exchange headwind is greatly reduced compared to the same period last year. We are maintaining our focus on working capital management to release cash and, in light of the prevailing trading environment, as previously announced we have reduced our 2015 capital investment programme by one third.

OUTLOOK

We expect the adverse market conditions to persist for the remainder of the year at least. We continue to face these challenges through a combination of ongoing self-help and enhanced restructuring actions. Overall, we expect our full year performance to be towards the lower end of the range of market expectations2.

CONFERENCE CALL

François Wanecq (Chief Executive) and Guy Young (Chief Financial Officer) will be hosting a conference call for analysts and investors at 08.30 (UK time) today (19 November).

To join the call, please use the dial in number below:

Conference call:
+44 (0)20 3427 1913 all participants
Confirmation code: 8216741

A replay of the call will be available approximately one hour after the event for two weeks on the following number:

Replay:
+44 (0)20 3427 0598 non-US participants
+1 347 366 9565 US participants
Confirmation code: 8216741

FUTURE EVENTS

Vesuvius’ preliminary announcement of results for the year ending 31 December 2015 are expected to be announced on Thursday, 3 March 2016.

For further information please contact:

Shareholder/analyst enquiries:

Vesuvius plc

François Wanecq, Chief Executive
+44 (0) 207 822 0000

Guy Young, Chief Financial Officer
+44 (0) 207 822 0000

Nicolas Matheï, Group Head of Corporate Finance
+44 (0) 207 822 0000

Virginia Skroski, Investor Relations Manager
+44 (0) 207 822 0016

Media enquiries:

MHP Communications
John Olsen/ Tim Roundtree/ Jamie Ricketts
+44 (0) 203 128 8100

Source: Vesuvius

Company Info

Foseco International Limited

Drayton Manor Business Park
B78 3TL Tamworth

Phone: +44 (0)1827 262021
Fax: +44 (0)1827 283725

E-Mail:FosecoGermany@vesuvius.com

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