RHI Magnesita's Strong 2024 Performance Amidst a Difficult Market Environment
RHI Magnesita, a global leader in the supply of high-grade refractory products, systems, and solutions, has announced its final results for the year ending 31 December 2024. Despite very challenging market conditions, which saw pressures on both sales volumes (down 1% in base business) and pricing (down 6%), the company reported strong operational and financial performance. RHI Magnesita’s ability to maintain a stable adjusted EBITA of €407 million (compared to €409 million in 2023) while improving its EBITA margin to 11.7% (from 11.4% in 2023) is a testament to its operational efficiency and cost management.
Financial Performance Highlights
•Adjusted EBITA remained stable at €407 million, a slight decrease from €409 million in 2023, demonstrating resilience despite a tough market.
•EBITA margin improved to 11.7% in 2024, up from 11.4% in 2023, reflecting the company’s ability to optimize costs and maintain profitability.
•Adjusted EPS rose to €5.32, compared to €4.98 in 2023, highlighting solid earnings growth.
•Strong cash generation of 103% helped reduce net debt by €52 million, bringing it down to €1,251 million.
•Gearing ratio remained stable at 2.3x, which aligns with the company’s target range, indicating the effective management of debt levels.
These financial results reflect RHI Magnesita’s continued focus on operational efficiency, cost discipline, and its ability to adapt in a challenging market environment.
Strategic Acquisitions Contributing to Growth
Despite a difficult market environment, RHI Magnesita’s M&A strategy played a significant role in boosting its financial performance. The company completed six acquisitions in 2023, contributing €77 million in Adjusted EBITDA in line with the company’s guidance of around €80 million. These strategic acquisitions helped enhance its market position and expanded its global footprint.
Recent Acquisitions and Expansions:
•Refrattari Trezzi: In 2024, RHI Magnesita acquired Refrattari Trezzi for €5 million to expand its recycling capabilities in Europe. The acquired business has been integrated into RHI Magnesita’s MIRECO joint venture, increasing the company’s share in MIRECO to 55% (up from 51% in 2023).
•Resco Group: In January 2025, RHI Magnesita completed the €391 million acquisition of the US-based Resco Group, marking the largest acquisition since the merger of RHI and Magnesita in 2017. This acquisition expands RHI Magnesita’s presence in the North American market and supports its ‘local for local’ production strategy. This move is expected to boost production capabilities in the US and allow the company to meet increasing customer demand for locally-produced refractory materials.
Focus for 2025: Integration and Debt Reduction
Looking ahead, RHI Magnesita’s primary focus in 2025 will be on integrating its recent acquisitions, particularly the Resco Group acquisition. The company plans to gradually reduce its gearing levels and complete the integration process to ensure long-term value creation.
Capital expenditure plans for 2025-2027 include a restructuring cost of €60 million and €40 million in capital expenditures, which are expected to deliver significant EBITA benefits:
•€10 million EBITA benefit in 2025
•€20 million EBITA benefit in 2026
•€30 million EBITA benefit per annum thereafter
RHI Magnesita remains committed to growth through acquisition and strengthening its position as a technology and sustainability leader in the fragmented refractory industry. The company will continue to manage its business cautiously, addressing the challenges posed by weak market demand while pursuing strategic objectives for long-term shareholder value.
Outlook for 2025: Challenging Market Conditions
The global refractory industry remains under pressure, with limited signs of recovery in most end markets. Some of the key challenges facing RHI Magnesita include:
•Economic transitions in China impacting supply chains and pricing dynamics.
•Structural declines in demand in Western economies, with a focus on cost and price pressure.
•However, there is healthy growth in India and East Asia, and strong demand for future-oriented materials like copper, aluminum, and glass is expected to continue in the long term.
Despite these challenges, RHI Magnesita aims to defend its leadership position by leveraging its strengths in operational efficiency, vertical integration, and an expanded customer base. The company’s ability to adapt and optimize operations will be key to navigating the ongoing market downturn.
Key Takeaways
•Strong performance in difficult market conditions: Despite facing declining sales volumes and pricing pressures, RHI Magnesita achieved stable Adjusted EBITA and improved EBITA margins.
•Strategic acquisitions contributed to €77 million in Adjusted EBITDA in 2024, with six acquisitions completed in 2023, including the Resco Group acquisition in January 2025.
•MIRECO joint venture expansion: RHI Magnesita increased its stake in MIRECO to 55% with the acquisition of Refrattari Trezzi, enhancing its recycling capabilities.
•Debt reduction: Strong cash generation helped the company reduce net debt by €52 million, bringing total debt down to €1,251 million.
•Focus on integration and debt reduction: In 2025, RHI Magnesita will focus on integrating acquisitions and gradually reducing its gearing levels to ensure sustainable growth.
•Outlook for 2025: Market conditions remain challenging, with weak demand in Western markets and growth in East Asia. RHI Magnesita will leverage its operational efficiency and expanded customer base to remain competitive.
•Resilient strategy: RHI Magnesita’s strategy to grow through acquisitions while maintaining cost discipline and operational efficiency continues to generate value for shareholders.
