RHI Magnesita half-year results 2026: margins rise despite soft demand

RHI Magnesita N.V. has reported a solid improvement in first-half profitability despite flat constant-currency revenue and continued weakness across parts of its customer base.

The refractory specialist supplies heat-resistant products used in industrial processes operating above 1,200°C, including steelmaking, cement, glass and non-ferrous metals production.

Adjusted EBITA rose 17% to €165 million in the six months ended 30 June 2026. At constant currency, growth reached 42%, showing the scale of the foreign exchange pressure absorbed during the period.

The strongest part of the announcement is the margin improvement. The main concern is that cash generation weakened as inventory increased, while the Industrial division remains dependent on delayed customer projects finally moving ahead.

RHI Magnesita's key half-year figures

Metric	H1 2026	H1 2025	Change
Revenue	€1,595 million	€1,677 million	Down 5%
Adjusted EBITDA	€230 million	€211 million	Up 9%
Adjusted EBITA	€165 million	€141 million	Up 17%
Adjusted EBITA margin	10.3%	8.4%	Up 190 basis points
Adjusted EPS	€1.81	€1.37	Up 32%
Adjusted operating cash flow	€160 million	€175 million	Down 8%
Net debt	€1,528 million	€1,583 million	Down 3% year on year
Interim dividend	€0.60	€0.60	Unchanged

Adjusted figures exclude items including amortisation, impairments and exceptional costs. Adjusted EBITA is management's preferred measure of underlying operating profit before amortisation.

Reported performance also improved. EBIT increased from €61 million to €98 million, profit before tax rose from €14 million to €47 million and earnings per share climbed from €0.15 to €0.68.

Cost savings are doing the heavy lifting

Revenue fell 4.9% on a reported basis but was flat at constant currency. Sales volumes declined by 2.7%, with the weakness concentrated in higher-value Industrial Projects.

Despite that difficult backdrop, gross profit held steady at €354 million and the gross margin increased from 21.1% to 22.2%. Adjusted EBITA margin advanced even further, rising from 8.4% to 10.3%.

That tells investors the improvement was not driven by stronger overall demand. It came mainly from pricing actions, plant network changes and lower administrative costs.

RHI Magnesita remains on track to deliver the previously guided €45 million adjusted EBITA benefit during 2026. This is split evenly between price adaptations, network optimisation and administrative savings.

The progress is encouraging because these measures are being delivered while markets remain soft. If demand eventually improves, a leaner cost base could provide stronger operating leverage, meaning revenue growth should translate more effectively into profit.

There is a qualification, however. The company excluded €42 million of costs from adjusted performance, including €21 million related to digitalisation, €14 million for network optimisation and €7 million for administrative cost reductions. Investors should therefore continue comparing adjusted profit with the reported numbers.

Steel offsets a weak Industrial division

Steel delivers the standout performance

Steel generated 71% of group revenue during the period and was the clear highlight.

Revenue declined 1% to €1,130 million on a reported basis but increased 5% at constant currency. Adjusted EBITA jumped 33% to €126 million, while the divisional margin rose from 8.3% to 11.2%.

Pricing, product mix and cost measures supported the improvement. Europe and India returned to profitability, while North America improved further.

This matters because Steel is the group's largest operation and refractory products are regularly consumed during steel production. That generally makes demand less dependent on occasional large investment decisions than in the Industrial business.

Industrial Projects remain the weak point

Industrial revenue fell 13% to €423 million, while adjusted EBITA dropped 19% to €37 million. Its margin declined from 9.3% to 8.8%.

Glass and Industrial Applications were particularly weak as customers delayed investment decisions. More than €50 million of Industrial Projects revenue has been deferred into future years, with a further €15 million deferred into the second half of 2026. Some of that could slip again.

Cement was broadly stable, while Non-ferrous Metals showed modest improvement. Even so, the timing of large projects remains an important uncertainty for the second-half outlook.

Cash flow and debt need attention

Adjusted operating cash flow declined from €175 million to €160 million, although cash conversion remained respectable at 97% of adjusted EBITA.

Working capital increased to €798 million from €769 million at the end of 2025. Inventory reached €1,012 million as the group stocked additional raw materials ahead of stronger expected second-half orders and sought protection from tariff uncertainty.

This pushed working capital intensity to 24.4%, compared with 21.7% at the end of 2025. Net debt consequently increased by €33 million from year-end to €1,528 million.

Management expects the inventory build to unwind, with working capital intensity returning to around 22% by December. It is targeting net debt of approximately €1,400 million and leverage of around 2.6 times adjusted EBITDA, down from 2.9 times at the half year.

That planned deleveraging is important because net interest expense increased from €22 million to €29 million following refinancing at higher rates and wider lending spreads.

Liquidity does not appear immediately constrained. RHI Magnesita reported €1,030 million of available liquidity, including an undrawn €600 million revolving credit facility.

Full-year guidance is maintained

Management maintained its full-year adjusted EBITA guidance of €400 million, including an expected €35 million foreign exchange headwind.

With €165 million delivered in the first half, the target implies approximately €235 million of adjusted EBITA in the second half. The company expects stronger seasonal Industrial shipments, project deliveries, self-help benefits and improved Steel order books to support that weighting.

Capital expenditure guidance was reduced from €130 million to €115 million following a review of internal projects. This should assist cash generation, although investors will want to ensure lower spending does not simply postpone necessary investment.

The group's €100 million digital infrastructure programme is around two-thirds complete. It is intended to support future efficiency, but the recent US enterprise resource planning rollout caused temporary disruption to shipping, invoicing and accounts payable processes.

Dividend remains steady

The board declared an interim dividend of €0.60 per share, unchanged from the previous year and worth €28 million in total.

It will be paid on 24 September 2026 to shareholders on the register on 28 August 2026.

The unchanged payment looks measured given elevated debt and weaker first-half cash flow. Earnings cover has improved, but deleveraging remains an important financial priority.

What investors should watch next

The central question is whether RHI Magnesita can convert stronger second-half order books into cash and deliver its €400 million profit target.

The positive case rests on expanding margins, a much stronger Steel business and visible cost savings. Adjusted EPS rose 32%, return on invested capital improved from 5.8% to 8.4%, and management has maintained guidance despite substantial currency pressure.

The risks are equally clear. Industrial customers remain cautious, project delays could continue and the second half must deliver significantly more adjusted EBITA than the first. Inventory also needs to fall if management is to reach its debt and leverage targets.

Safety performance deserves monitoring too. Total Recordable Injury Frequency increased from 4.1 at the end of 2025 to 5.4 per million hours worked, although the company said this partly reflected the addition of customer sites to its safety management system.

Overall, these results show meaningful internal progress rather than a broad demand recovery. The next update needs to demonstrate that higher profitability is translating into lower inventory, stronger cash flow and reduced debt.

Investors can review the original company announcement for the full financial statements and alternative performance measure reconciliations.