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Investing.com -- RHI Magnesita, the leading global supplier of refractory products, on Wednesday reported a significant decline in first-half profits and lowered its full-year guidance as industrial project deferrals and pricing pressures weighed on performance.
The company now expects full-year adjusted EBITA between €370-390 million, down from its previous guidance of "modestly above" €407 million.
For the first half of 2025, RHI Magnesita posted adjusted EBITA of €141 million, a 26% decrease from €190 million in the same period last year. Revenue fell 3% to €1.68 billion from €1.73 billion YoY.
The company’s adjusted EBITA margin contracted to 8.4% from 11.0% a year earlier, reflecting a 260 basis point decline.
The performance deterioration was primarily driven by a sharp decline in industrial project demand, with Glass and Non-ferrous metals project revenue falling by 40% and 22% respectively.
The company also faced pricing pressures, with average prices declining 5% amid a highly competitive environment.
"RHI Magnesita continues to navigate an extremely challenging external market environment with cyclically lower industrial project business, uncertainty caused by tariff negotiations, FX headwinds, aggressive competition and continued weak end market demand all contributing to sharply lower margins," said CEO Stefan Borgas.
The company’s steel division showed relative stability with sales volumes increasing 1% including acquisitions, though base business volumes declined 1%. Industrial sales volumes grew 3% including M&A but fell 4% in the base business.
RHI Magnesita maintained its interim dividend at €0.60 per share despite adjusted earnings per share dropping 47% to €1.37 from €2.59 in the first half of 2024.
Net debt to pro forma adjusted EBITDA increased to 3.1x from 2.3x at the end of 2024, primarily due to the €390 million acquisition of Resco completed in the first quarter.
Management expects improvement in the second half, targeting up to €120 million in EBITA uplift through price increases, higher steel volumes, cost savings, and the execution of deferred non-ferrous metals projects.
The company has already implemented plant closures in Germany to address structural overcapacity and reduced its capital expenditure guidance for 2025 from €145 million to €130 million.
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