RHI Magnesita Sees Revenue Jump More than 24% in 2018 First Half
Price increases drove revenue development for RHI Magnesita in the first half of 2018, more than offsetting higher raw material input costs.
RHI Magnesita N.V. recently announced its results for the six months ended June 30, 2018. Revenue for the 2018 first half was €1.5 billion (approximately $1.8 billion), 24.6% higher than the comparative period on a constant currency basis (76.4% higher on a reported basis). Price increases drove revenue development, more than offsetting higher raw material input costs.
“We are delighted to report strong growth of 25% in the first half and profit growth of 88%,” said Stefan Borgas, CEO. “We have seen a continuation of the positive trends we saw in the second half of 2017, the benefits of our high level of vertical integration and the synergies from the merger of RHI and Magnesita in Q4 2017. Continued strong demand from our end markets and price increases drove revenue growth, more than offsetting higher raw material input costs. Our integration plans developed ahead of our plan both in terms of speed of capture and total amount.
“Whilst geopolitical challenges could impact the second half and beyond, we believe our geographically diversified production bases and broad customer profile will insulate the group to a large extent. Today, we continue to anticipate that full year operating results will accrue the benefits from strong pricing, additional merger synergies and network optimization.
“Overall, we have achieved strong first half results, and management expectations for the full year operating results remain unchanged. We thank our customers for their support and collaboration in times of tight availability, and our employees for all their ideas, efforts, and contributions.”
Steel production growth year-over-year was robust, at 4.6%, most notably in Asia and MEA. RHI Magnesita’s deliveries for steel clients reportedly outperformed the respective trends in North America, South America and Europe. The company’s businesses in India, Central America and Europe were also strong, with deliveries increasing above 10% in the period and revenue growth of over 30%.
Altogether, revenue for the Steel division was nearly €1.1 billion (~ $1.3 billion) during the 2018 first half, 29.3% higher than the prior year, reflecting the significant outperformance of deliveries on top of a strong underlying market, as well as price increases to compensate for raw material inflation. Sales growth has also been supported by increasing cross-selling initiatives across both products and geographies.
Revenue for the Industrial division was €413 million (~ $483.4 million) during the first half of 2018, 14.3% higher than the prior year, as lower deliveries to Cement/Lime and sales of Minerals were more than compensated by higher deliveries to Glass clients and price increases across all segments. The Glass segment had strong performance, with demand developing for projects in the U.S. and Poland. The Nonferrous metals segment is performing in line with management expectations; new projects are yet to pick up, despite good progress in new copper projects in Africa and Asia.
In Environment, Energy & Chemicals, RHI Magnesita is seeing increasing demand in China, Europe and CIS, with the installation business picking up. The Cement/Lime segment is flat, as result of continued low capacity utilization in China and Brazil, and some market share losses due to pricing. The Minerals segment has benefitted from raw material price increases and supply shortage caused by the stricter environmental enforcement in China. Revenue growth has flattened out as increased refractory demand has caused the group to use more minerals internally, and consequently have less raw materials available for external sales.
For more information, visit www.rhimagnesita.com.