Wien (OTS) - RHI Magnesita (LSE: RHIM), the leading global supplier
of refractory products, systems and solutions, today provides an
update on trading for the three months to 30 September 2020 (‘Q3’)
and the strategic cost measures being taken to ensure the long-term
success of the Group.
Zwtl.: Q3 Trading
Consistent with expectations at the half year results on 5 August
2020, Q3 trading was similar to Q2 reflecting continued stability in
our markets during what is seasonally a quieter period in July and
August. Encouragingly, the order book improved steadily but still
slowly through the period. With the exception of the Industrial
Projects business, we now have stronger visibility to the beginning
Within the Steel Division, North America and South America started
to see signs of recovery in Q3. Europe and India continued to
reflect the slower rate of recovery in the steel industry in both
regions. Activity levels improved further in China, although from a
The Industrial Division remained subdued. While Q3 is a seasonally
quieter period for the Cement/Lime segment, it was further impacted
by customers delaying orders. We continue to expect to see modest
seasonal improvements in Q4. The projects business experienced
further postponements, as customers delay capital projects, and will
not see the peak levels experienced in 2019.
Raw material prices fell slightly in July and August and improved
in September. The Group continues to derive a solid margin from its
backward integration, with a 2.3% Adjusted EBITA margin contribution
in Q3 2020, unchanged from the H1 2020 results.
As previously announced, the Group expects to realise €50 million
of short-term fixed cost savings for the full year 2020 as part of
its Covid-19 response. €10 million of these will be maintained into
2021 in the form of lower depreciation.
Zwtl.: Strategic initiatives
The Group continues to make good progress on its longer-term,
strategic cost savings initiatives. These comprise the Production
Optimisation Plan and SG&A Reduction Plan.
Plans to extend the Production Optimisation Plan have now been
finalised and the Group intends to close additional production
facilities with a focus on Europe and South America. The intention
is to take the total plant rationalisation up to 10 sites by H1 2022
and increases the cumulative strategic cost savings (including the
SG&A Reduction Plan) to €100 million by 2022.
The total capital expenditure for the strategic cost savings
initiatives increases to €160 million by 2022, with exceptional
restructuring costs of €100 million and impairments of €110 million.
The details of the strategic cost savings initiatives are included as
Zwtl.: Strong financial position
RHI Magnesita has a resilient balance sheet, liquidity of €1.1
billion, no material debt maturity before 2023 and significant
headroom under its net debt to EBITDA covenant. The Group continues
its focus on working capital management, especially inventories and
accounts receivable. Working capital has reduced further in the
third quarter and the Group expects further cash inflows in Q4.
Zwtl.: Dividend reinstated
Due to the resilient underlying cash generation, strength of the
balance sheet and improving confidence in the market outlook, the
Board is today declaring an interim dividend of €0.50 per share,
which is in line with the 2019 interim dividend. The dividend will be
payable to shareholders on 21 December 2020 on the register at the
close of trading on 4 December 2020. The ex-dividend date is 3
While the Group continues to target leverage of between 0.5x and
1.5x net debt to EBITDA, the impact of COVID-19 on 2020 EBITDA means
that leverage is likely to be modestly above this range at the end of
2020 and through 2021 as the Group continues to prioritise investment
in projects to improve its competitive position and shareholder
returns. The Board is confident that leverage should reduce
While there remains uncertainty on the continuing impact of the
COVID-19 pandemic, we are confident that the Group will continue to
demonstrate its resilience, while remaining well-positioned for when
the recovery takes place. Our confidence is underpinned by the
Group’s clear strategy and the benefit of ongoing business
improvement initiatives. This supports the decision to pay an
interim dividend and our expectations for FY 2020 adjusted EBITA to
be in line with current market expectation.
Zwtl.: About RHI Magnesita
RHI Magnesita is the leading global supplier of high-grade
refractory products, systems and solutions which are critical for
high-temperature processes exceeding 1,200°C in a wide range of
industries, including steel, cement, non-ferrous metals and glass.
With a vertically integrated value chain, from raw materials to
refractory products and full performance-based solutions, RHI
Magnesita serves customers around the world, with around 13,000
employees in 35 main production sites and more than 70 sales offices.
RHI Magnesita intends to leverage its leadership in terms of revenue,
scale, product portfolio and diversified geographic presence to
target strategically those countries and regions benefitting from
more dynamic economic growth prospects.
Its shares have a premium listing on the London Stock Exchange
(symbol: RHIM) and are a constituent of the FTSE 250 index. For more
information please visit: [www.rhimagnesita.com]
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