Q1 2019 Trading Update RHI Magnesita
RHI Magnesita remains confident in its expectations for the full financial year, after a solid trading performance in the first quarter of 2019, which continues to reflect the trends seen in the latter part of 2018.
Some uncertainties exist in the macroeconomic outlook and customer end markets, and management remains vigilant, particularly in terms of plant volumes and production costs. Steel Division revenues have been flat in the quarter against the same period in 2018, with growth in North America and Asia offsetting weaker deliveries in Europe and South America.
The Industrial Division has performed strongly in Q1, continuing the momentum of H2 2018. This has been driven by higher sales in the cement business in China and in the South America region. Revenues from the Group´s Project Businesses also saw a strong performance, benefitting from higher sales in the MEA and South America regions. Whilst there has been some easing in magnesium based raw materials prices in the early part of 2019, alumina-based raw material costs keep increasing. Overall the raw material pricing outlook remains broadly stable. The Group has announced a 5 % price increase across the product portfolio. However, given lead times this will have a limited impact in 2019.
The Group continues to successfully achieve its integration plans and is on track to realize the synergy targets of at least EUR 90 million in 2019 and EUR 110 million by 2020. RHI Magnesita is focused on addressing the specific operational issues experienced at four European plants and challenges in the supply chain. The detailed improvement plans are progressing as planned and the management continues to expect to substantially resolve these issues in 2019 and recoup around EUR 20 million of the prior year impact on profits in 2019. As announced previously, the Group continues to consider a potential transaction involving Kumas Manyezit Sanayi A.S./TR and will update the market as appropriate in due course. Whilst macroeconomic uncertainties remain at an unusually high level, RHI Magnesita expects to continue to realise the benefits from its integrated model and its growth and cost savings initiatives.