Vesuvius revenue flows following cost-cutting programme

Vesuvius reported a rise in revenue as it benefited from weak sterling while the molten metal flow engineer embarked on a restructuring programme to cut costs in 2016.

Revenue increased 6% on a reported basis in 2016 to £1.4bn, compared to the previous year, while underlying revenue, adjusted for the effects of acquisitions and currency translation, fell 4%.

Trading profit rose 7.5% to £133.3m but was down 1.5% on an underlying basis, while return on sales increased by 10 basis points on a reported basis, and 30 basis points on an underlying basis, to 9.5%.

The FTSE 250 company said that 2016 started slowly as the steel market was negatively impacted by Chinese exports and also by a reduction in industrial activity in the US and UK, but the situation improved slightly during the year, with tariff measures imposed in the US and Europe with “worldwide markets signalling a progressively more protectionist approach”.

Nevertheless, the company said it had made good progress in long-term, structural growth markets such as China, India and Brazil.

Vesuvius experienced the positive effects of restructuring the company with benefits of £16.6m last year and a further increase in target savings to £35m by the end of 2017, while net rose 9.8% to £320.3m due to the effect of foreign exchange and cash restructuring costs.

Earnings per share grew 8.4% to 30.4p and the company recommended a final dividend of 11.40p per share, a 2.5% increase, bringing the full year dividend to 16.55p, up 1.7%.

Chief executive François Wanecq said: "We delivered an encouraging set of results in 2016 in challenging market conditions and made important progress towards our strategic and operating objectives, in particular, growth in return on sales as a result of the restructuring programme. Our resilience reflects the strength of our customer relationships, built on our proven ability to offer innovation, reliability and efficiency."

"Whilst the trading environment remains broadly stable, we have seen early signs of improvement in 2017. Following our cost improvement efforts, we are well positioned to benefit from any recovery in demand and we will continue to focus on creating value for our customers and shareholders alike. We remain confident of making further progress, both in the near and longer term."