In the six months to June 30, the £1.5bn company, which makes equipment used in foundries, posted an 8% rise in revenue to £897.0mln (H1 17: £831.5mln), while trading profits jumped 15% to £99.6mln (H1 17: £86.3mln).
“Favourable” market conditions
Vesuvius said the strong performance was down to “favourable” market conditions, while the company was also able to pass on the rising cost of raw materials to its customers through price rises.
Its restructuring programme which it announced in March is coming along nicely too, with the firm increasing the targeted annual savings to £22mln from £15mln.
Vesuvius rewarded its shareholders with a 9% rise in the interim dividend to 6.0p (H1 17: 5.5p) and said it now expects full-year trading profit will be “marginally above” the market forecasts of £189mln.
“We had a strong H1 2018, delivering our best half-year revenue, trading profit and return on sales since we became an independent company in 2012,” said chief executive Patrick André.
“We continued to outperform underlying markets thanks to the growth in demand for our value-creating solutions, supported by our increasing investment in R&D. We are cautiously optimistic regarding H2 2018 performance as the environment in our key end markets remains positive.
Numis a big fan
City broker Numis repeated its ‘buy’ recommendation and 750p price target.
It said in a note to clients: “Another strong performance with above market growth, positive operational gearing, restructuring benefits along with reversal of the material and operational headwinds of 2017.
“Despite this progress and the energy of a new management team the shares trade at a 30% discount to the UK engineering sector (PE 12.8x v 18.1x).
“This overly discounts any cyclicality given the positive trading environment, continued internal actions and rapidly improving balance sheet.”
Shares are up 8% to 627p on Thursday morning.