Revenue resilient, profits squeezed – Vesuvius posts tough FY2025
Vesuvius has delivered full year 2025 results broadly in line with guidance, but the profit squeeze is clear. Revenue held steady at £1,809.5 million, up 0.7% on a like-for-like basis (which strips out currency moves and M&A), yet trading profit fell to £151.1 million. Return on Sales – trading profit as a percentage of revenue – slipped to 8.4% as pricing and product mix bit, especially in Europe.
Management calls 2026 a transition year to recovery, underpinned by more cost savings, a full year of recent acquisitions and normalised capex. The dividend nudges up and guidance points to profit growth on a constant currency basis.
Key numbers at a glance
| Metric | FY2025 | FY2024 | Comment |
|---|---|---|---|
| Revenue | £1,809.5m | £1,820.1m | +0.7% like-for-like, -0.6% reported |
| Trading profit (adjusted operating) | £151.1m | £188.0m | -17.0% like-for-like |
| Return on Sales | 8.4% | 10.3% | -170 bps like-for-like |
| Adjusted basic EPS | 34.2p | 43.3p | -17.7% like-for-like |
| Free cash flow | £36.0m | £57.8m | Cash conversion 75% |
| Cash inflow from operations | £173.4m | £216.7m | Solid underlying cash generation |
| Net debt | £452.4m | £329.2m | Up with buybacks and M&A |
| Net debt / EBITDA | 2.0x (pro-forma) | 1.3x | Top of 1.0-2.0x target range |
| Dividend per share | 23.6p | 23.5p | Final 16.5p proposed |
What drove the slump – EMEA weakness, pricing and mix
The headline: roughly 80% of the year-on-year drop in group trading profit came from EMEA. Both Steel and Foundry in the region faced softer end markets and price pressure. The group re-established positive net pricing in H2 – good news – but it was not enough to cover the shortfall from H1. Product mix also moved against them as some EMEA customers traded down to lower value, lower margin products.
On the positive side, the cost reduction programme outperformed, delivering £17.8 million of in-year savings as part of a larger £55 million plan through 2028. New products did their bit too – 20.5% of sales came from products launched in the last five years, beating the 2026 target a year early.
Divisional breakdown – Steel steady on revenue, profits hit; Foundry tougher
Steel Division – small growth, margin pressure
- Revenue £1,342.6 million, +1.4% like-for-like, flat reported.
- Trading profit £120.0 million, down 18.3% like-for-like. Return on Sales 8.9% (-210 bps).
- Flow Control revenue was flat like-for-like at £750.9 million, with H2 showing positive net pricing.
- Advanced Refractories grew 3.9% like-for-like to £555.6 million, helped by strong India and South-East Asia.
- Sensors & Probes fell 4.5% like-for-like to £36.1 million as Europe, Canada, Mexico and South America softened.
Read-through: Vesuvius is holding or gaining share in Asia, notably India, which offsets some Americas erosion. The margin squeeze has been most acute in EMEA due to mix and earlier pricing gaps, but the H2 pricing turn is an encouraging sign.
Foundry Division – markets weak ex-India and China
- Revenue £466.9 million, down 1.5% like-for-like.
- Trading profit £31.1 million, down 11.2% like-for-like. Return on Sales 6.7% (-70 bps).
- Americas -3.4% like-for-like; EMEA -4.5%; Asia-Pacific +3.2% helped by India and China.
- Net pricing slightly negative in H2 but much improved on H1; some temporary inefficiencies from site rationalisations.
MMS – acquired in November – is performing as expected and shifts exposure towards the faster-growing non-ferrous foundry market.
Cash flow, capex and balance sheet – tighter but manageable
Free cash flow reduced to £36.0 million as profits fell and capex remained elevated, albeit down to £81.0 million net (2024: £96.5 million) after completing a capacity expansion programme. Working capital intensity ticked up to 23.4% of revenue from 22.9%, with debtor days the main driver.
Net debt rose to £452.4 million due to dividends (£57.9 million), buybacks (£34.8 million) and acquisitions (£38.9 million). Pro-forma net debt to EBITDA is 2.0x, the top end of Vesuvius’ target range, or 2.1x without the acquisition adjustment. Interest cover remains comfortable at 14.1x, and committed facilities total £751.6 million with £195.5 million undrawn.
For 2026, capex is guided to £70-75 million, which, alongside improved trading profit, should help deleveraging.
Strategy check – cost cuts, innovation and two bolt-ons
- Cost optimisation: £17.8 million savings delivered in 2025 and £30.8 million over two years, targeting £55 million by 2028. A further c. £10 million in-year benefit is expected in 2026. One-off costs of £18.9 million were recorded to deliver these savings.
- Innovation: R&D spend was £35.3 million (1.9% of revenue). New Product Sales reached 20.5% with 24 launches. Robotics momentum is building across Flow Control and Advanced Refractories.
- M&A: PiroMET (Turkey) enhances Advanced Refractories and robotics capability. Molten Metal Systems brings industry-leading crucibles into Foundry and tilts the group further towards non-ferrous. Post-acquisition contributions in 2025 were £14.9 million revenue and £1.2 million operating profit from PiroMET, and £7.6 million revenue and £1.9 million operating profit from MMS.
If both acquisitions had been owned all year, pro-forma revenue and trading profit would have been £1,849.3 million and £158.2 million respectively. Management expects non-ferrous exposure to reach about 27% of revenue in 2026, up from 21%.
Dividend and buybacks – steady returns in a down year
The Board proposes a final dividend of 16.5p, taking the full-year payout to 23.6p (up 0.4%). Dividend cover is 1.5x on adjusted EPS of 34.2p. The second £50 million buyback programme completed in 2025, with cash outflow of £34.8 million and 8.6 million shares repurchased, reducing the share count by roughly 3%.
Outlook for 2026 – transition year with tailwinds building
Management expects profit growth in 2026 on a constant currency basis, driven by cost savings, a full-year of PiroMET and MMS, and modest volume growth as Steel and Foundry markets begin to recover. Trade protection measures in Steel are expected to have a more meaningful impact from late 2026, which could curb Chinese export pressure and support ex-China production, notably in the EU and the Americas.
Guidance pointers: depreciation £75-80 million, net finance charge about £20-21 million, and an adjusted effective tax rate of 27.5% subject to mix. Capex normalises to £70-75 million, aiding cash flow and leverage.
My take – glass half full, but EMEA and leverage need watching
There is no glossing over it – 2025 was a margin reset year. The negatives are clear: lower Return on Sales, pressure in EMEA, Foundry still soft outside India and China, and leverage at the top of the range. The positives matter though. Pricing turned positive in H2, cost actions are delivering ahead of plan, and the acquisitions are strategically sensible, tilting the mix to non-ferrous and high-growth regions while strengthening robotics.
If trading stabilises and management lands the extra c. £10 million of savings in 2026, Vesuvius should rebuild margins and cash. A return toward the 12.5% RoS target will likely need healthier European demand and the benefit of trade actions flowing through – more a 2027 story per management commentary – but the self-help levers are working.
What I will watch next
- Pricing discipline – does positive net pricing persist through H1 2026.
- EMEA mix – signs that customers shift back to higher value products as conditions improve.
- Cost savings – delivery of the c. £10 million incremental benefit in 2026.
- MMS and PiroMET integration – margin progression and cross-selling, especially in India and EEMEA.
- Leverage trend – capex normalisation and cash conversion to move net debt/EBITDA down from 2.0x.
Bottom line: a tough but controlled year. With cost cuts ahead of plan, innovation humming, and two focused acquisitions on board, Vesuvius looks better placed for a cyclical upturn. Execution and EMEA demand are now the swing factors.
