Vesuvius warns on profits amid challenging conditions

Vesuvius on Tuesday warned that it now expects annual earnings to fall as market conditions continued to weaken through the third quarter.

The molten metal flow engineering and technology specialist said it now anticipates full-year group trading profit to be between £180m and £190m, down from the £197.2m achieved last year.

Vesuvius said the steel and foundry divisions have both been impacted by weakened end markets in Europe, the Middle East and Africa, with steel producers having announced annualised production cuts equivalent to around 4% of 2018 volumes since the end of June.

The FTSE 250 company also highlighted vehicle manufacturing concerns after IHS Markit lowered its annual light vehicle production forecasts to a 5.6% decline from 2018, compared to a previously-expected 4.2% contraction.

The company said it will remain focused on the cost optimisation plans and research that it announced in its interim results.

"Despite the short-term end market weakness we are experiencing, we see no structural change to the positive, long-term fundamentals of our end markets and remain confident in our ability to achieve a 12.5% return-on-sales, although this is unlikely to be delivered until we revert to long-term growth trends," said Vesuvius.

At 0850 BST, the shares were down 10% at 373.80p.