Vesuvius full-year profits hit by Covid disruptions

Molten metal flow engineer Vesuvius posted a drop in full-year profit and revenue on Thursday as its performance was dented by the Covid crisis.

In the year to the end of December 2020, pre-tax profit fell 45.6% to £64.5m, with revenue down 14.7% to £1.46bn. Trading profit fell by £80m from 2019 to £101.4m, reflecting the impact of the pandemic.

Nevertheless, Vesuvius proposed a final dividend of 14.3p, bringing the full-year dividend to 17.4p, up from 6.2p a share in 2019. The company had cancelled its 14.3p proposed final 2019 dividend.

"The board has determined that this level of dividend is appropriate for the level of business activity in 2020, while also considering the strong cash flow generation, and that the company has sufficient liquidity and overall balance sheet strength to justify payment, whilst also maintaining flexibility to fund both organic and inorganic growth, as opportunities arise," it said.

Vesuvius said demand in its end markets started to improve in both the Steel and Foundry divisions in the third quarter of 2020 and these trends continued into the final quarter.

The like-for-like decline in steel production volume in the world excluding China slowed to 2.9% in the second half versus the same period in 2019, following a 14.3% decline in the first half, it noted.

Despite the recovery in H2 2020, steel production in NAFTA and Europe remained well below 2019 levels, with a similar story in the end markets of its Foundry division.

Chief executive Patrick Andrew said: "Clear signs of recovery are now apparent in both our Steel and Foundry end markets and we believe that this recovery should accelerate in the second half of 2021, supported by the lifting of most pandemic-related restrictions by then.

"Vesuvius is emerging from this difficult period stronger than before. We have low leverage and an optimised manufacturing footprint resulting from our successfully completed restructuring programmes. We also benefit from our flexible and low capital intensive, entrepreneurial and decentralised business model, which has proven its value during 2020. We are confident that the group will deliver a meaningful improvement in financial performance in 2021."

At 0900 GMT, the shares were down 5.6% at 520p.