RHI Magnesita announced on Monday a 13% improvement in revenue in its annual results, to 2.55 billion euros (£2.13 billion), and 16% in constant currencies, with volumes shipped now above levels of 2019.

Refractory systems company FTSE 250 said adjusted EBITA was €280 million, down from €260 million in 2020 and in line with its guidance of between €280 and €310 million.

He said those profits were supported by a €1,270 million price increase program, which was largely realized in the fourth quarter.

Magnesita reported “unprecedented” supply chain disruption in the 12 months ended Dec. 31, resulting in higher costs for transport, energy and purchased raw materials.

This has led to a “significant” increase in inventory, as well as the use of air freight to guarantee deliveries to customers.

Net debt fell from 582 million euros year-on-year to 1.01 billion euros, which the company’s board attributed to high inventories, with strong available liquidity of 1.18 billion euros also recorded, broadly in line with 2020.

RHI Magnesita also reported on its exposure to Russia, Ukraine and the Commonwealth of Independent States (CIS) given the current conflict and sweeping global sanctions, confirming that it has 63 Russia-based employees and in Ukraine, but no refractory production sites.

Around 3.4% of the group’s revenue came from the CIS region in 2021, with the board saying the business would be affected by the sanctions.

The company said it would closely monitor sanctions escalations to stay in full compliance, adding that it expected the main financial impact to come from rising energy costs.

Looking ahead, Magnesita said in its steel division there was “solid” backlog and visibility for the first half, although the strong recovery in customer demand seen in 2021 is expected to normalize in the second. semester.

The industrial division’s order book covered most of 2022, with delays sometimes exceeding 12 months.

The industrial division’s margins should continue to benefit in the first quarter from a more favorable price environment for cement customers, compared to the previous year.

Pressures on freight, energy and raw material costs continued in the new financial year, however, with “significant” labor inflation now also expected in local currency and euros, as high inflation led to wage demands.

Further price increases took effect in January, and further price increases were being negotiated to preserve margins in response to continued cost inflation.

The net debt to EBITDA ratio of 2.6x was above the group’s target range of 0.5x to 1.5x, mainly due to inventory build-up.

RHI Magnesita said its debt is expected to decline in 2022, due to lower capital expenditures and EBITDA growth.

“This year has been a solid year of progress for RHI Magnesita under difficult conditions,” said Managing Director Stefan Borgas.

“Customer demand has picked up much faster than expected, creating unprecedented pressure on global supply chains and significant increases in logistics costs and delays.

“We responded with €127 million of largely realized price increases in the fourth quarter and increased inventory to maintain supply to our customers through this period of disruption.”

Borgas said that despite logistical difficulties and market volatility, the company has advanced strategic investments to ensure long-term growth and improved margins.

“We have agreed to acquire SÖRMAŞ in Turkey in October and we are making a new joint venture investment in Chongqing, China.

“Our strategic commitment to expand into new markets has been validated by strong organic revenue growth from our operations in India and China.

“We enter 2022 with restored margins and ready to strengthen our leadership position in sustainability and technology in the global refractories industry.”

As of 0953 GMT, RHI Magnesita shares were down 5.51% at 2,846 pence.


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