RHI Magnesita 2024 Half Year Results: Strong cash conversion in challenging market conditions

On July 24, RHI Magnesita, the leading global supplier of high-grade refractory products, systems and solutions, announced its unaudited results for the six months ended 30 June 2024.

RHI Magnesita delivered a resilient set of results against a challenging market backdrop which was largely dominated by declining sales volumes for both steel and industrial divisions, and lower average pricing. Revenue decreased by 0.3% whilst Adjusted EBITA declined 5% on the prior period to €190 million (H1 2023: €200 million).

RHI Magnesita’s Adjusted EBITDA contribution from M&A of €34 million represented progress towards the full year guidance of c.€80 million and the company expects synergy benefits to fall into H2, whilst demand and pricing conditions will be at a similar level to the base business. EPS increased 2% to €2.59 per share (H1 2023: €2.53 per share), benefiting from FX-related gains. The company saw a strong EBITA cash conversion during the period at 123% (H1 2023: 114%) whilst net debt levels reduced to €1,274 million, with gearing held within the guided range at 2.4x.

Decarbonisation and sustainability

The company has continued to drive forward on its commitment to recycle and reuse spent refractories across the business, with its recycling rate increasing to 13.2% compared to 13.0% in H1 2023, as the company continues towards its revised 15.0% target rate by 2025. RHI Magnesita agreed to acquire Trezzi Refrattari in June 2024, an Italy-based recycling specialist, for an enterprise value of €5 million. The acquisition marks an important step towards RHI Magnesita achieving its decarbonisation targets which are being largely delivered through recycling. 

Since 2019, more than 1 million tonnes of CO2 emissions have been averted as a direct result of RHI Magnesita’s recycling activity and use of secondary raw materials.

Stefan Borgas, Chief Executive Officer, said: “Demand for refractories was weaker than forecast in the first half of 2024 as conditions in the global construction, transportation and other key end markets remained subdued. We have taken appropriate measures to safeguard profitability and cash generation throughout this period, as demonstrated by the release of €86 million of working capital in the first half of the year and the delivery of our EBITA margin guidance at 11.0%. Record refractory margins compensated for the temporarily lower contribution from our raw material assets. We remain on track to achieve full year guidance despite the weak external market conditions experienced in the first half, with higher sales volumes anticipated in the remainder of the year. We have been able to significantly advance our strategic M&A ambitions over the last three years and the contribution to earnings from acquisitions will grow as integrations progress and synergies are realised. As previously announced, we are proud to have been chosen in April to design and supply refractories to SMS Group as the original equipment manufacturer for Thyssenkrupp’s Duisburg green steel project. This is a welcome validation of our strategy to lead the refractory industry in sustainability, as we seek to reduce our own CO2 emissions and to provide enabling technologies for our customers to do the same.”

Outlook for H2 2024

Refractory demand remains subdued in all key geographies, except for India, following a period of weaker than forecast steel output in the first half of the year and reduced activity in the key end markets of construction and transportation.

However, RHI Magnesita remains on track to achieve Adjusted EBITA of at least €410 million at a margin of 11.0% in 2024, as previously guided, based on normal seasonality in the cement market in Q4, a higher weighting of steel sales volumes in the second half and unit cost savings resulting from increased capacity utilisation and efficiency measures.

RHI Magnesita continues to take actions to preserve margins and is well positioned to increase output into a recovery, with significant operational gearing and fixed cost absorption benefits to be realised once customer demand returns.