RHI Magnesita Reports Declining Margins And Sales In Q1, Eyes Recovery In Q2

(RTTNews) - RHI Magnesita N.V. (RHIM.L), On Wednesday, issued an update on its trading performance for the first quarter of 2025 and said it faced increasing downside risks due to weak market conditions and rising global trade tensions, which could impact its end markets.

The first quarter proved challenging, with lower sales volumes and a continued decline in project business across the glass and non-ferrous metals sectors. Additionally, pricing pressures in the cement and steel markets in India and the Middle East contributed to weaker earnings. EBITA margins in the first quarter declined as expected, affected by lower high-margin project business, weaker finished goods pricing, and rising raw material costs.

To address these challenges, RHI Magnesita has reduced plant capacity utilization compared to Q4 2024, leading to fixed cost under-absorption. As part of its Network Optimization Programme or NOP, the company announced the closure of its Wetro plant in Germany and initiated additional cost-saving measures targeting both Cost of Goods Sold and Selling, General & Administration expenses.

Net debt increased to €1.6 billion as of 31 March 2025, primarily due to the completion of the Resco acquisition and the payment of €346 million in cash proceeds. This was partially offset by a new €200 million syndicated term loan. Working capital rose modestly, aligning with expectations of increased sales in Q2.

Despite weaker Q1 trading conditions, RHI Magnesita expects performance to improve in Q2, supported by cost-saving initiatives and a stronger order book. However, macroeconomic volatility and global supply chain instability pose risks to end-market demand. The weaker US dollar is also expected to impact earnings from North America, potentially creating a €15 million headwind to Adjusted EBITA.

Stefan Borgas, Chief Executive Officer of RHI Magnesita, said, "RHI Magnesita continues to navigate difficult market conditions as end markets and customer production volumes remain subdued and as industrial projects are being postponed into the second half of the year. New uncertainties surrounding global trade and tariff arrangements are adding complexity to our planning processes and risk of further project postponements."

"Guidance for 2025 Adjusted EBITA to be modestly ahead of 2024 is maintained, although downside risks have increased and a step up in profitability in the second half will be required to meet expectations," added Borgas.