Vesuvius (LON:VSVS) reported full-year 2025 performance that management said was in line with expectations, with slightly higher revenue but a sharp decline in profitability as challenging steel and foundry markets—particularly in Europe—combined with a difficult first half on pricing and mix.
Full-year performance: revenue up slightly, profit down
Chief Executive Patrick André said revenue increased 0.7% on a like-for-like basis, with limited headline price increases and market share gains offsetting market declines in both steel and foundry. However, trading profit fell 17% like-for-like and return on sales declined 170 basis points, which management attributed to negative net pricing and mixed effects in the first half of the year that could not be fully offset by improved pricing in the second half and cost reductions.
Dividends, leverage, and cash flow
The company proposed a final dividend of GBX 16.5 per share, taking the full-year dividend to GBX 23.6 per share, a 0.4% increase year-over-year. Management characterized the increase as modest, reflecting “a degree of cautiousness” due to the political environment while maintaining confidence in the business model and medium-term outlook.
Vesuvius’ leverage increased following the completion of its capital investment program, acquisitions, and a share buyback. Net debt ended the year at GBP 452 million, with pro forma leverage at 2x, which Collis said is at the top end of the company’s preferred 1x–2x range. The company expects leverage to decline as one-off cash outflows end, capital spending normalizes, and trading profit improves.
On cash generation, Collis said cash flow conversion improved from 69% to 75%, with a “marked improvement” expected in 2026. Capital expenditure declined by GBP 15 million from 2024 to 2025 and is expected to fall to GBP 70 million to GBP 75 million in 2026. Working capital intensity (12-month rolling average) was 23.4%, and the company reiterated its objective to reduce it to 21%, though Collis described the effort as “hard yards” given decentralized operations and the need for consistent systems and discipline.
Steel and Foundry: market share gains amid weak end markets
In Steel, management said global production volumes declined 1.9% in 2025, driven by a 4.4% decline in China. Production outside China increased 1.3%, with growth concentrated in India and Southeast Asia. Steel production in the U.K. and E.U. declined 3.5%.
Despite the market decline, Vesuvius reported market share gains in both Flow Control and Advanced Refractories, particularly in Asia. André said the group increased volumes in China by 3.7% in a declining market, which he attributed to technology leadership. In the Americas, the Steel Division saw a limited and temporary market share erosion tied to one-off events, including plant closures or activity reductions at high-share customers in Canada and the U.S., as well as customer destocking in Argentina.
On profitability, the Steel Division’s trading profit declined 18.3% like-for-like, with EMEA representing close to three-quarters of the decline. Management said performance improved in the second half as “clearly positive” net pricing returned, and it expects positive net pricing to be maintained in 2026. Management also said operational issues in North America are “mostly over,” supporting a production ramp-up later in 2026.
In Foundry, André said markets were challenging across regions, with the exception of Asia where India and China “did quite well.” The sharpest declines were in the E.U. plus U.K. and South America, which together represented 40% of Foundry sales. Vesuvius said it gained market share in all regions and continued repositioning toward non-ferrous end markets and faster-growing geographies.
Foundry revenue declined 1.5% like-for-like and trading profit fell 11.2% like-for-like. André said EMEA and South America accounted for more than 100% of the profit decline, meaning the rest of the world delivered a profit increase in 2025. He added that the company is not losing money in any Foundry region, but profitability has fallen in Europe and South America while remaining stable or improving in Asia and other regions.
Cost savings, acquisitions, and operational issues
Management emphasized execution on structural cost reduction. The group delivered GBP 17.8 million of in-year cost savings, with an exit run rate of GBP 37.4 million, and reiterated a target of at least GBP 55 million in recurring savings by 2028. Collis said savings over 2024–2025 exceeded GBP 30 million, putting the company one year ahead of its original plan, though market declines offset some of the benefit in reported results.
Collis outlined actions including plant footprint optimization (with activities in Belgium, Italy, Turkey, South Africa, Malaysia, and the U.S.), automation projects (GBP 3 million in 2025, reducing headcount by about 90), and OpEx reductions in Europe, including changes enabled by the ERP rollout. For 2026, management guided to GBP 10 million of additional savings, while noting potential upside given prior execution.
On acquisitions, the company completed the purchase of Pyromet (serving steel customers in MENA) on March 1 and MMS (Molten Metal Systems, focused on non-ferrous foundry customers) in mid-November. Collis said the acquisitions contributed GBP 22.5 million of in-year revenue, with annualized revenues of GBP 57.9 million if owned for a full year. André said integration is proceeding well and is expected to have a “significantly positive” impact in 2026.
In the Q&A, management provided more detail on MMS: André described it as an GBP 8 million EBITDA business at acquisition and said the company initially targeted GBP 4 million of synergies (50% of EBITDA) but now expects to deliver more than GBP 4 million over 24 months through the end of 2027. He said early synergies would be weighted to SG&A, with manufacturing synergies coming progressively through 2027. Collis added that only a small amount of synergy is included in a referenced GBP 6 million profit benefit from acquisitions for 2026, with the “bulk” expected in 2027.
Management also discussed one-off operational issues. Collis cited unforeseen challenges tied to site rationalization, including productivity and quality issues following a shift of Foundry activities from Germany, and one-off inefficiencies related to increasing production capacity in the U.S. and Mexico. In Q&A, Collis estimated the Foundry transfer issue at around GBP 2.5 million and said it is now largely behind the company.
2026 outlook: transition year toward recovery, with geopolitical risks
Looking ahead, André said the company still anticipates 2026 will be a “transition to recovery” in steel and foundry markets, with steel trade protection measures expected to have a meaningful impact later in the year. The company expects 2026 results to benefit from:
- continued execution of the cost reduction program,
- full-year contribution from recent acquisitions, and
- modest volume growth.
Management cautioned that the impact of recent Middle East events is difficult to assess, but said that absent extended disruption it expects to deliver profit growth in 2026 “in line with expectations” on a constant currency basis. Collis said the company’s assumptions include roughly 1% volume growth and pricing that covers cost inflation, with a cautious stance on how quickly Europe improves.
André reiterated the medium-term target of a 12.5% return on sales, arguing that structural changes—including trade measures and improving conditions outside China—support the potential for margin and cash flow improvement as end markets recover, particularly from 2027 onward.
About Vesuvius (LON:VSVS)
We are a global leader in metal flow engineering, providing a full range of engineering services and solutions to its customers worldwide, principally serving the steel and foundry industries.
