RHI Magnesita ditches dividend as H1 profits fall on lower demand
Refractory products maker RHI Magnesita saw interim profits more than halved as demand at its steel and industrial divisions was hit by the coronavirus pandemic.
The company on Wednesday also scrapped its half-year dividend as pre-tax profit for the six months to June 30 slumped to €70m from €165m in 2019, as revenue fell 24% to €1.71bn.
RHI said economic uncertainty remained, “particularly in respect of further outbreaks and consequential economic weakness”.
“Conditions through the second quarter have been consistent with the group's Covid -19 planning assumptions and activity levels expected to remain subdued into the third quarter, with limited visibility thereafter,” said chief executive Stefan Borgas.
“The long-term economic impact of Covid-19 remains uncertain,” he added.
Net debt was stable at €666m and the company said it was in a 'strong' financial position, with liquidity of €1.1bn.
Steel production globally contracted by 6% compared to the same period last year, the company said. Excluding China, output was down 14.3%, with a contraction of 24.8% in the second quarter, driving weaker demand from the group's steel customers across all regions.
This led to steel division revenues to decline by 22.4% to €820m on a constant currency basis. Gross margin declined over the same period by 310 basis points to 22.4%, which was predominantly due to lower sales volumes causing poorer fixed cost absorption and lower raw material prices, the company said.