RHI Magnesita Reports Strong H2 Recovery and 2026 Guidance Amid Market Challenges

RHI Magnesita 2025: H2 rebound, self‑help delivers, guidance raised for 2026

RHI Magnesita has posted 2025 full year results that tell a story of two halves. H1 was hampered by weak pricing, project deferrals and fixed cost underabsorption. H2 snapped back sharply as management’s self‑help programme bit, margins recovered, and cash kept flowing. Guidance for 2026 is firmer, albeit with macro caveats.

Key numbers (€, unless stated)	2025	2024
Revenue	3,366 million	3,487 million
Adjusted EBITDA	504 million	543 million
Adjusted EBITA (margin)	373 million (11.1%)	407 million (11.7%)
Adjusted EPS	€4.18	€5.32
Free cash flow	214 million	225 million
Net debt	1,495 million	1,251 million
Leverage (Net debt to Pro Forma Adjusted EBITDA)	2.9x	2.3x
Dividend per share	€1.80	€1.80

H2 momentum in black and white

H2 vs H1 split	H1 2025	H2 2025
Adjusted EBITA	€141 million	€232 million
Adjusted EBITA margin	8.4%	13.7%

That step‑up is the headline. Management leaned hard into pricing discipline, cost control and plant network optimisation, and it showed up fast in profit quality.

What drove the turnaround

Three practical levers did the heavy lifting:

• Self‑help savings – network optimisation, SG&A reductions and procurement delivered material H2 benefits. Adjusted items detail €27 million for plant closures and €10 million for permanent SG&A cuts, signalling structural change, not just a squeeze.
• Regionalisation – the footprint has been re‑tooled for an increasingly protectionist world. North America did the heavy lifting, contributing 32% of Group gross profit.
• Portfolio moves – Resco integration is going well, adding €184 million of revenue and €25 million of Adjusted EBITA in 11 months, and strengthening local-for-local production in the US and Canada.

Jargon buster: Adjusted EBITA is operating profit before amortisation and one‑off items. It is used to show the underlying performance of the business.

End‑market and regional picture

Steel resilient, Industrials softer

• Steel revenue: €2,328 million, down 2% reported but slightly ahead at constant currency. Pricing pressure and Chinese exports hurt margins, but volumes were broadly supported by M&A.
• Industrials: €958 million, down 9% as high‑value projects in Non‑ferrous and Glass slowed, especially in H1.

Regional performance highlights

• North America: revenue up 22% to €863 million, with Resco and BPI broadening the mix and 19% higher volumes. Margin dipped modestly, but the region now anchors Group profitability.
• Europe & CIS: revenue down 12% to €727 million on lower volumes and weak Glass. Plant closures and cost actions turned profitability around in H2 despite a grim backdrop.
• India: revenue €441 million, volumes up 4% but tight pricing cut gross margin to 14.4%. Market share recaptured late in the year, with 4PRO contracts supporting premium categories.
• Latin America and META: both down 11-13% on pricing pressure and Chinese imports.
• China & East Asia: revenue €377 million, margin pressure across Industrials; Steel volumes up 1% against lower national output.

Recycling rate hit a record 15.9% (2024: 14.2%), with Europe above 22%. Sustainability is quietly becoming a commercial edge.

Cash, debt and dividend – the quality of earnings

Despite softer revenue, cash generation stayed robust:

• Cash conversion 105% (Adjusted EBITA to cash) thanks to tight working capital. Working capital intensity fell to 21.7%.
• Free cash flow of €214 million broadly matched 2024, even after lower EBITDA.
• Net debt rose to €1,495 million due to the Resco purchase. Leverage at 2.9x stays within covenants and is guided to fall to around 2.6x by end‑2026.
• Dividend held at €1.80 per share, consistent with a sub‑3.0x adjusted earnings cover policy.

Watch the finance line though: net finance expenses more than doubled to €95 million, primarily from FX, lower interest income and non‑controlling interest effects. Reported EPS fell to €1.82; adjusted EPS was €4.18.

2026 guidance: rebuilding margins without a market tailwind

Management expects Adjusted EBITA to rise about 17% to €435 million at constant currency in FY 2026, or around €400 million after FX headwinds. The lift is almost entirely self‑help: more efficiency, ongoing network optimisation and actions to restore vertical integration profitability as raw material prices sit at cyclical lows. A more normal H1:H2 split is expected.

Cash conversion is guided above 90% with further deleveraging. No large M&A cash out is anticipated in 2026, though the pipeline remains core to strategy.

Market tone is still cautious. Steel sits at cyclical lows globally. Industrial project visibility is limited, with modest improvement in Non‑ferrous and no clear rebound in Glass before late 2026. Potential regulatory support in the EU and Brazil is not expected to materially help before 2027.

Why it matters for investors

Positives I like

• H2 execution proves the cost and footprint programme is working, with a 530 bps margin swing from H1 to H2.
• North America scale-up via Resco gives RHIM a strong, tariff‑resilient local base and a broader Industrial mix.
• Cash discipline is excellent. 105% cash conversion with lower working capital intensity is a sign of real operational grip.
• Clear 2026 plan driven by controllables rather than a market bounce, plus tangible actions to improve vertical integration returns.
• Dividend maintained and covered, with leverage set to trend down.

Things to keep an eye on

• Macro still soft: order books in Steel and Glass do not signal an imminent upcycle.
• Pricing pressure from Chinese exports across multiple regions could crimp margins if discipline elsewhere wobbles.
• FX and interest costs hit the P&L in 2025. Another year of FX headwinds is baked into guidance.
• Vertical integration contribution remains low. The improvement path is laid out, but early 2026 delivery will be scrutinised.

My take

This reads like a well‑run business doing the hard yards through a downturn. The H2 improvement is not a fluke. It is the product of specific, sometimes painful actions: plant closures, SG&A resets, local-for-local manufacturing and sharper pricing. Resco strengthens the high‑quality North American profit pool and helps reduce tariff risk. Cash generation and working capital management are standout strengths.

Near term, the market is not doing RHIM many favours. That makes the 2026 guidance more credible in my view, because it rests on levers the company controls. If industrial project activity normalises into late 2026 and 2027, there is operating leverage to come on top. Until then, expect steady blocking and tackling: margin rebuild, cash discipline, and debt edging down while the dividend is held.

For investors, this is a margin‑recovery and cash‑compounding story with optionality on a cyclical upturn. The main swing factors are FX, Chinese export pressure and the pace of improving raw material integration returns. On balance, H2 shows the engine has torque. 2026 is about keeping the foot down.