Vesuvius half-year results 2026: cash flow improves as Steel issues weigh

Vesuvius plc delivered a mixed set of half-year results, with stronger cash generation and an impressive recovery in Foundry offset by operational problems across its larger Steel division.

Adjusted revenue edged higher, but trading profit and margins declined on a reported basis. Statutory earnings fell much more sharply, largely reflecting restructuring expenses, asset impairments and other separately reported items.

The more encouraging message is that cash flow improved substantially, net debt fell and management expects full-year trading profit to be slightly ahead of 2025 at constant currency.

The challenge is execution. Vesuvius needs to resolve its production problems and start benefiting from the recovery it is seeing in global steel markets.

Vesuvius half-year results at a glance

Metric	H1 2026	H1 2025	Reported change
Adjusted revenue	£913.7 million	£907.5 million	+0.7%
Adjusted trading profit	£74.0 million	£77.0 million	-3.9%
Return on sales	8.1%	8.5%	-40 basis points
Adjusted basic EPS	16.3p	17.1p	-5.0%
Statutory operating profit	£47.4 million	£65.5 million	-27.6%
Statutory basic EPS	6.8p	12.5p	-45.0%
Free cash flow	£27.5 million	£13.9 million outflow	Improved
Net debt	£429.6 million	£452.4 million at FY 2025	Down £22.8 million
Interim dividend	7.1p	7.1p	Flat

Adjusted revenue increased by 1.5% at constant currency, although the reported increase was only 0.7% because of foreign exchange headwinds.

The Molten Metal Systems acquisition also supported growth. On a pro-forma basis, which adjusts the prior period as if the acquisition had already happened, revenue fell by 0.7%.

That means the underlying top-line performance was broadly flat rather than meaningfully growing.

Steel production recovered, but Vesuvius could not fully benefit

Steel production outside China, Iran, Russia and Ukraine grew by 3.8% against H1 2025. India increased production by 7.1%, while North America grew by 5.7%.

Chinese net steel exports also fell by 5.3%. This matters because lower export pressure can improve competitive conditions for steelmakers elsewhere, supporting demand from Vesuvius customers.

However, the Steel division's revenue fell by 1.0% at constant currency to £656.8 million. Trading profit declined by 8.9% to £53.3 million, while return on sales dropped by 70 basis points to 8.1%.

The frustrating part for investors is that the market backdrop improved, but operational problems stopped Vesuvius from taking full advantage.

North American problems cost around £6 million

Substandard raw materials supplied to a North American Flow Control plant caused reworking, higher rejection rates and reduced usable production capacity. Vesuvius said customer quality was not affected because deficient products were identified before delivery.

Even so, the disruption prevented the company from meeting existing demand and contributed to higher costs.

Management also identified organisational capability gaps and failures to maintain critical maintenance and operational standards in the North American Steel business. Extra freight costs were incurred as products were expedited to customers.

The estimated lost profit impact in North America was around £6 million during the half.

A slower-than-planned ramp-up at the new Vizag plant in India caused a further estimated £2 million trading profit impact. Two of its three production lines have now reached the desired capacity, with the third expected to follow during H2.

Management expects the overall operational issues to be resolved by the end of 2026, although the precise remaining cost is not disclosed.

Foundry provided the brighter performance

Foundry revenue rose by 8.7% at constant currency to £256.9 million. Trading profit increased by 32.7% to £20.7 million, while return on sales improved by 150 basis points to 8.1%.

The division benefited from positive pricing, structural cost reductions, market share gains and the MMS acquisition, including associated synergies.

This progress was achieved despite subdued markets in Europe and South America. China and India remained positive, while North America and Japan showed early signs of improvement.

The Foundry performance demonstrates that Vesuvius' self-help measures can deliver results even when end-market conditions are not especially supportive. It also helped offset much of the weakness in Steel.

Cash generation was the strongest part of the update

Cash generated from operations rose by 70.3% to £93.5 million, while adjusted operating cash flow increased to £59.8 million from £25.8 million.

Cash conversion, which measures how effectively trading profit turns into operating cash, improved from 33% to 81%. Free cash flow moved from a £13.9 million outflow to a £27.5 million inflow.

Working capital discipline played an important role. Trade working capital intensity improved from 23.6% at the end of 2025 to 23.1%, while the absolute working capital balance remained broadly stable despite the normal seasonal build-up.

Net debt consequently fell by £22.8 million to £429.6 million. Pro-forma net debt to EBITDA improved from 2.0 times to 1.9 times, leaving Vesuvius comfortably within its maximum covenant of 3.25 times.

Capital expenditure increased to £42.6 million, with full-year net expenditure now expected to be between £75 million and £80 million.

Cost savings are helping, but restructuring hits statutory profit

Vesuvius delivered £7.4 million of structural savings during H1, ahead of schedule. It remains on track to deliver at least around £10 million in 2026 and is targeting £55 million of annual in-year savings by 2028.

The programme comes with significant upfront costs. Vesuvius recorded £16.4 million of cost-reduction programme expenses, including £10.4 million of non-cash impairments and £6.0 million of cash costs.

These charges help explain why statutory operating profit fell by 27.6% to £47.4 million and statutory basic earnings per share dropped by 45.0% to 6.8p.

The company plans to exit unprofitable Advanced Refractories manufacturing operations in South Africa and South America during H2. Removing loss-making activities could improve the quality of future earnings, but investors will want evidence that the promised savings outweigh the restructuring costs.

Dividend maintained as management expects H2 progress

The interim dividend remains unchanged at 7.1p per share. It is due to be paid on 8 October 2026 to shareholders on the register on 4 September 2026, with an ex-dividend date of 3 September 2026.

Management expects full-year trading profit to be slightly ahead of FY 2025 on a constant-currency basis. An exact profit forecast was not disclosed.

The outlook assumes continued recovery in steel markets and reduced operational disruption during H2. Geopolitical uncertainty in the Middle East remains a risk, while currency movements could continue to affect reported results.

What investors should watch next

The original company announcement shows a business making genuine progress on cash, costs and Foundry profitability, but struggling to execute consistently in Steel.

Three issues deserve particular attention during the second half:

1. Whether the North American and Indian production problems are resolved by year-end.
2. Whether Steel revenue and market share begin to reflect the improving market backdrop.
3. Whether stronger free cash flow continues to reduce net debt.

There is a credible recovery story here. Foundry is improving, pricing remains positive, cost savings are ahead of schedule and the balance sheet is moving in the right direction.

But the Steel division is the larger part of Vesuvius, and its operational problems are not minor. The next results need to show that management has converted corrective action into recovered sales, lower costs and stronger margins.