Here is a summary of the key points from the trading update provided by RHI Magnesita N.V. for the first quarter of 2025
Increased downside risks to the 2025 trading outlook due to weak H1 performance expectations and rising global trade tensions.
More challenging trading conditions in Q1 due to lower sales volumes, declining project business in glass and non-ferrous metals, and pricing issues in the cement and steel markets in India and the Middle East.
Lower EBITA margins impacted by various factors, including reduced volumes in high-margin project business and higher raw material costs.
The Group is operating its plants at lower capacity utilization rates, and has announced the closure of its Wetro plant in Germany as part of its Network Optimisation Programme.
Additional cost-saving measures have been initiated to mitigate the impact on margins.
A price increase program is being implemented to restore margins, but securing increases may be challenging due to competitive pressure, especially in India and West Asia.
Net debt increased to €1.6 billion as of Q1 2025, primarily due to the Resco acquisition, which was partially funded by a new syndicated term loan.
Working capital rose modestly, and guidance for year-end working capital intensity remains at c.24%, excluding potential supply chain disruptions from tariff changes.
Gearing is expected to be above the target range at c.2.9x at the half-year but is anticipated to reduce in the second half.
The Groups growth strategy focuses primarily on M&A, and the acquisition of Resco for €391 million in Q1 strengthens its presence in the North American market.
First-quarter trading conditions were weaker, with reduced revenues and margins. Performance is expected to improve in Q2, but with a more significant step up required in the second half to meet expectations.
Guidance for 2025 Adjusted EBITA is maintained to be modestly ahead of 2024, but downside risks have increased due to macroeconomic volatility and potential supply chain disruptions.
The weaker US dollar will also impact earnings from the North America region.
The Group continues to navigate difficult market conditions and has implemented measures to support margins and optimize its production network.