RHI Magnesita lowers guidance after tough first half

(Sharecast News) - RHI Magnesita lowered its full-year profit guidance on Wednesday, after reporting a steep drop in earnings for the first half of 2025, as deferred industrial projects, weaker pricing, and cost pressures weighed on margins. The FTSE 250 refractory products group posted adjusted EBITA of €141m for the six months ended 30 June, down 26% from the prior year, with revenues slipping 3% to €1.68bn.

Adjusted earnings per share fell 47% to €1.37.

The EBITA margin narrowed to 9.4%, down 260 basis points, as lower industrial activity and unfavourable product mix took their toll.

The company said the downturn in demand was particularly acute in its industrial division, where revenues from glass and non-ferrous metals projects dropped 40% and 22% respectively.

Customers also shifted towards lower-value products during a period of low capacity utilisation, intensifying pressure on margins.

Meanwhile, steel demand was described as "low but stable," with positive growth prospects in India and North America offset by structural decline in Europe.

"RHI Magnesita continues to navigate an extremely challenging external market environment with cyclically lower industrial project business, uncertainty caused by tariff negotiations, FX headwinds, aggressive competition and continued weak end market demand all contributing to sharply lower margins in the first half of 2025," said chief executive Stefan Borgas.

"Notwithstanding these external factors, we are disappointed with our financial performance and we are determined to take the urgent and necessary steps to deliver improvements."

The group was now guiding for full-year adjusted EBITA of between €370m and €390m, down from a previous market consensus of €406 million.

That implied a second-half uplift of up to €249m, driven by the phasing of deferred orders, price increases, higher steel volumes, and cost savings from plant closures and synergies.

RHI Magnesita said up to €120m of EBITA improvement is expected in the second half, including €50m from the resumption of non-ferrous metals projects and €30m from price rises, primarily in the steel business.

The company said it was also targeting €20m in additional steel volume, €10m in sales, general and administrative savings, and €10m in benefits from recently closed German plants.

Synergies from the Resco acquisition and ongoing network optimisation initiatives are expected to contribute further.

Adjusted operating cash flow fell 21% to €175m, though cash conversion remained strong at 124% of adjusted EBITA.

Net debt rose to €1.58bn, or 3.1 times pro forma EBITDA, due in part to the €390m acquisition of Resco earlier this year.

Management said it expected gearing to fall to around 2.8x by year-end.

An interim dividend of 60 euro cents per share was declared, unchanged from last year.

Despite headwinds, the group reported resilient sales volumes in both divisions on a merger and acquisition-adjusted basis, with growth in India, China, and the US.

It also announced a new US recycling joint venture with BPI as part of its strategy to expand in higher-growth geographies.

However, Borgas acknowledged that market conditions remained difficult, saying the company was "taking urgent and necessary steps" to improve performance.

At 1011 BST, shares in RHI Magnesita were down 12.47% at 2,564.7p.

Reporting by Josh White for Sharecast.com.