Half Year 2026 RHI Magnesita NV Earnings Call Transcript
Key Points
- Adjusted EBITA increased 17% year-on-year to EUR165 million, with a 42% improvement on a constant currency basis, driven by successful self-help measures.
- Steel business showed resilience with revenues up 5% on a constant currency basis and gross profit up 17%, supported by pricing adjustments and 4PRO contract wins.
- 4PRO business development is gaining traction, including in China, where it is helping to gain market share and protect price levels in a competitive market.
- Industrial projects order book is rebounding, with a solid second-half outlook and expectations of normalization over the next 12-24 months.
- Strong cash conversion of 97% and a confirmed full-year guidance, with expectations of net debt reduction to approximately EUR1.4 billion and leverage moving towards 2.6 times by year-end.
- Network optimization initiatives are delivering savings, with further opportunities identified in the Americas and Europe, including local-for-local supply chain benefits.
- Backward integration margins are expected to improve in the second half, supported by a good order book for magnesite-based products.
- The company maintains a strong market position in nonferrous metals, with a 70% win-loss ratio in project tenders.
- New innovations, such as laser scanning and AI-based optimization for kiln monitoring, are seeing rapid customer adoption.
- The interim dividend of EUR0.60 per share was declared, consistent with the dividend policy.
- Revenue declined 4.9% to EUR1.6 billion, with a EUR24 million foreign exchange headwind from a weaker US dollar and Indian rupee.
- Industrial projects business remains challenging, with revenues down 13% and about EUR50 million of high-margin project revenue deferred into 2027.
- Temporary loss of market share in the US and India, with the US impacted by ERP go-live issues and India by a conscious exit from low-margin business.
- Working capital increased in the first half, leading to a rise in net debt to EUR1.528 billion, with leverage stable at 2.9 times.
- The glass business remains the weakest end market, expected to stay below historical activity levels despite an improving order book.
- Fixed cost under absorption in key high-cost plants, particularly in Europe, due to weak industrial project demand, could not be fully offset by self-help measures.
- The refractory margin temporarily dipped below 10% in the first half, below the historical average of above 11%.
- Backward integration margin remains at a cyclical low, with only around 1 percentage point expected for the full year.
- Market conditions remain volatile across all regions, with steel demand soft and Chinese steel exports still at near-record levels.
- There is a risk of further project delays, particularly in November when customers review CapEx budgets, which could impact the second-half industrial contribution.
Good morning, good afternoon, everybody, from Vienna. Thank you for joining us for the presentation of our 2026 half year results. I'm joined today by our CFO, Ian Botha; and our Head of Investor Relations, Alexander Ordosch; and as a special guest, Gustavo Franco, our Chief Customer Officer.
Before moving -- we move into the main presentation, let me highlight the three key takeaways from our results from our perspective.
First takeaway, our self-help measures continued to deliver on what we have set them up to deliver, and they are the main driver of the business improvement that we see in the number despite a soft and volatile market. These self-help measures were especially visible in our steel business.
To sustain this momentum into 2027 and even beyond, we are advancing new self-help initiatives across our raw materials plants, our refractory plant network and driven by our digitization investments that are coming to a level where we can start to take advantage of them. Together, these measures
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