RHI Magnesita Q1 sales fall, downside risks increase

(Sharecast News) - Refractory products supplier RHI Magnesita said both sales and margins had fallen in Q1 as downside risks to its FY25 trading outlook increased, driven by a weak outlook for H1 performance and rising global trade tensions, all of which could negatively affect end markets. RHI Magnesita said Q1 trading conditions "became more challenging", reflecting lower sales volumes, a continued decline in project business in the glass and non-ferrous metals sectors worldwide and lower pricing for cement and steel markets in India and the Middle East.

Underlying earnings margins were also lower, impacted by a combination of lower volumes in its high-margin project business, weaker finished goods pricing and higher cost of purchased raw material.

As a result of the demand backdrop, RHI stated it was continuing to operate its plants at lower levels of capacity utilisation compared to Q424, with fixed cost under-absorption further weighing on margins.

The FTSE 250-listed firm also noted that in response to higher unit costs, a price increase programme was now being implemented to restore margins over the remainder of the year, although it noted that securing increases was "likely to be more challenging" in the current market environment.

As of 1040 BST, RHI shares were down 5.71% at 3,059.60p.

Reporting by Iain Gilbert at Sharecast.com