Vesuvius plc, a global leader in molten metal flow engineering, releases the following Interim Management Statement covering trading in the period from 1 July to date and its financial condition.
Group trading performance in the period has been in line with management’s expectations. Underlying market conditions reflected a continuation of the activity levels seen in the second quarter and were generally stable.
We continue to successfully implement a number of actions to mitigate the effect of the weakness in endmarket demand experienced since the third quarter of 2012, including our programme to streamline the Group’s portfolio and focus on higher-value product lines. These self-help measures are contributing to an improvement in the Group’s trading margins. Our expectations for full year performance therefore remain unchanged.
Regional steel production trends continue to be mixed. Global volumes as reported by the World Steel Association are 4.7% higher than the third quarter of last year, with continued weakness in Europe and a flat market in North America offset by growth in the Middle East and China. As expected, steel production volumes were lower than in the second quarter of this year, reflecting the normal seasonality resulting from customer shutdowns over July and August. The steel division’s performance reflects these trends with recent trading activity being above the corresponding period of last year but below the second quarter of this year.
Despite some improvement in the truck and light vehicle markets, the weakness of the global mining and North American railroad sectors has prevented an overall recovery in the foundry casting market to date. Therefore, whilst the business environment remains challenging and recent trading activity has been marginally below the corresponding period of last year, we have mitigated these effects with the on-going focus on operational efficiency and the active management of our cost base.
There has been no material change in our financial position from that reported at our half year results on 2 August 2013. Our focus on working capital management and cash generation remains strong, and we continue to be well financed with a robust balance sheet.
The share repurchase programme initiated on 4 June 2013 was completed in mid-September, with £30m of the proceeds of the sale of the Precious Metals Processing division having been returned to shareholders. The remainder of the proceeds were applied to the reduction of the Group’s net borrowings. These actions underline the Group’s commitment to exercise prudent capital discipline and offer attractive returns to shareholders.
François Wanecq (Chief Executive) and Chris O’Shea (Chief Financial Officer) will be hosting a conference call for analysts and investors at 8:00 a.m. (UK time) today (25 Oct).