Vesuvius profit rises after quitting low-margin units

Vesuvius Plc, a maker of ceramic moulds and linings for steelmakers and foundries, reported a 14 percent jump in pretax profit as margins recovered after the company quit less-profitable businesses.

Vesuvius, spun off from Cookson Group in 2012, has also cut costs as it battles a downturn in European and North American steel markets.

The company has disposed of its low-margin refractory installation business in Canada, closed a steel consumables plant in China and sold its brick refractories business in Germany.

Vesuvius also sold its precious metals processing business – which recycled and supplied semi-finished gold, silver and platinum to the jewellery industry – last year soon after it sold its money-losing solar crucibles business.

Margins grew to 9.3 percent from 8.5 percent a year earlier.

“We are exactly in the shape we wanted to be and working for growth in emerging markets,” Chief Executive Francois Wanecq told Reuters.

‎”One of the main opportunities for us remains in China. Our expectation is that the Chinese steel industry will undergo a transformation as they evolve to a more consumer-driven economy and this should create a lot of opportunities for us in the coming years.”

Pretax profit rose to 125 million pounds in 2013 from 109.7 million pounds a year earlier.

Trading profit at Vesuvius rose 6.6 percent to 140 million pounds ($234.04 million) in the year ended December 31.

Revenue fell to 1.51 billion pounds from 1.55 billion pounds. Revenue at the company’s steel division, which accounts for 70 percent of sales, was flat.

Analysts on average had expected a pretax profit of 120 million pounds on revenue of 1.54 billion pounds according to Thomson Reuters I/B/E/S.

Numis Securities analysts said in a note that the results were ahead of their expectations and that margins had improved despite a 2.4 percent decline in sales.

Steel production fell 2.4 percent in its key North American market in the year, while it rose 5.4 percent in Europe, Middle East and Africa.

Vesuvius declared a final dividend of 10.25 pence per share.