RHI Magnesita Reports Strong H2 2025 EBITA Margin Improvement Amid Challenging Market

H2 momentum: EBITA margin jumps to 12.7% on self-help and cost cuts

RHI Magnesita has delivered the step-up it promised for the second half of 2025. Over July to October, Adjusted EBITA hit €136 million with a 12.7% margin, a notable lift from the first half’s €141 million at an 8.4% margin. That improvement arrived despite the usual summer slowdown in Q3 across northern hemisphere markets.

Adjusted EBITA is a profitability measure before interest, tax and amortisation, adjusted for one-offs. A margin is simply the percentage of sales that turns into profit. The key takeaway here is that margins have expanded meaningfully, and management is clear that most of that improvement is down to self-help – cost reductions, footprint actions, and synergies – rather than a booming end-market.

Metric	Figure	Period / Context
Adjusted EBITA	€136 million	Jul-Oct 2025
Adjusted EBITA margin	12.7%	Jul-Oct 2025
Adjusted EBITA	€141 million	H1 2025
Adjusted EBITA margin	8.4%	H1 2025
FY 2025 Adjusted EBITA guidance	€370-390 million	Reiterated
Industrial order volumes	~40% below	Versus recent years
Backward integration margin	1.1%	Year-to-date
US local production	65% in 2025	Target >75% in H2 2026
Year-end leverage target	~3.0x	Following Q4 de-leveraging

End-market reality: steel still soft, India and META up, Europe down

Steel volumes remain subdued and broadly in line with full-year expectations. Western automotive steel demand is particularly weak. The growth bright spots are India and META (Middle East, Africa and Türkiye), where the Group regained market share in India as planned. Europe continues to contract.

This is not a demand-driven recovery. Management is candid that end-markets, especially steel, are at a cyclical low and a rapid normalisation is not expected. The fact that margins have expanded anyway underscores the impact of the company’s cost actions.

Industrial projects: order book improving, but still at a low ebb

The industrial project order book has strengthened through recent months, aligning with the H1 guidance and giving visibility for the rest of 2025. However, high-margin projects are still at a low point, with order volumes around 40% below recent years. There is also a second-half skew driven by seasonality and customer timing.

In plain terms, the pipeline is healing, not healthy. The good news is that management expects the improved H2 performance to carry into H1 2026, with modest pricing gains sticking.

Pricing and competition: small gains despite China overcapacity

Pricing remains fiercely competitive, particularly in markets with excess supply such as China and in regions that import heavily from Chinese producers, including India, East Asia and the Middle East. Even so, RHI Magnesita achieved small price increases, helped by local-for-local supply, 4PRO contracts and its innovation pipeline.

Local-for-local means producing close to the end customer, which helps service reliability and cuts logistics risk. 4PRO contracts are performance-oriented solutions that tie refractory supply more closely to customer outcomes – useful when spot pricing is under pressure.

Cost actions and Resco synergies: the main driver of margin uplift

The self-help programme is doing the heavy lifting. SG&A savings and fixed cost reductions from two plant closures in Germany are progressing in line with guidance and account for the vast majority of the margin improvement. Integration of the former Resco plants is also on track, with synergies delivered as expected.

In North America, US local production has increased from 50% to 65% in 2025 and is expected to exceed 75% in H2 2026, reducing tariff exposure. New headwinds have emerged, though, with tariffs on raw materials and finished goods exported from Brazil to the US.

Backward integration margins near historic lows

Backward integration – owning raw material mines and plants – is earning very little right now, with a 1.1% margin year-to-date due to very low raw material prices. Management is moving on further cost reduction and portfolio optimisation in these operations, aiming for a stepwise improvement over the next two years.

For investors, this is a clear optionality lever. If raw materials pricing normalises or the cost actions land, the integrated model should contribute more to Group profits than it does today.

Cash, working capital and leverage: de-lever to ~3.0x by year-end

Working capital rose temporarily to support delivery of a stronger Q4 order book and seasonal cement demand. Management expects Q4 deliveries to drive de-leveraging to approximately 3.0x by year-end. Leverage here refers to a debt-to-earnings measure; the precise definition is not disclosed.

Net debt and cash figures are not disclosed in this update, but the message is clear: inventories and receivables went up to fulfil Q4, and cash generation in the final quarter should bring leverage down.

Guidance intact and outlook: momentum into H1 2026

Full-year Adjusted EBITA guidance of €370-390 million is reiterated, supported by market share recovery in India and META, cost reduction and a seasonal recovery in China. A weak US Dollar and Indian Rupee are a drag on reported results. The current industrial order book supports the view that H2’s improved performance will continue into H1 2026, with modest pricing benefits retained.

The caution flag is still up on demand. Management does not expect a quick rebound in the steel cycle, which means continued reliance on execution, mix and cost control to defend margins.

Trade policy watch: EU quotas and potential Brazilian duties

Two policy developments to note:

• The European Commission proposes cutting by almost half its tariff-free steel import quota. Timing in 2026 is uncertain, but higher in-region steel production could stabilise refractory demand in Europe.
• Brazil has launched an investigation into potential duty protection for refractory materials. Outcome and timing remain uncertain.

RHI Magnesita has strong positions and a local footprint in both regions. If implemented, these measures could turn into a tailwind in late 2026 or 2027.

My take: quality of earnings up, but recovery still company-driven

This is a solid trading update in a tough market. The 12.7% margin over July-October, achieved in a seasonally softer period, shows the self-help plan is working. Cost-out, plant closures and Resco synergies are doing exactly what they should. Guidance is intact, and leverage is set to improve into year-end.

On the flip side, demand is still weak in core steel markets, backward integration profits are thin, and competitive pressure from China keeps pricing tight. Currency translation is also unhelpful. In other words, RHI Magnesita’s gains are mostly self-generated rather than cyclical – which is positive for execution quality but puts a ceiling on upside until end-markets recover.

What to watch next

• Delivery on FY 2025 Adjusted EBITA of €370-390 million.
• Year-end leverage around 3.0x after Q4 working capital unwind.
• Trajectory of the industrial order book into H1 2026.
• Progress on backward integration margin uplift from 1.1% over the next two years.
• US localisation pushing beyond 75% in H2 2026 and any impact from Brazil-US tariff changes.
• Any formal moves on EU steel import quotas or Brazilian refractory duties.

Overall, I see a business tightening the screws, protecting profitability and positioning for operating leverage when steel and industrial demand finally turn. The execution bar remains high, but momentum is clearly better in H2 and set to carry into H1 2026.