Engineering and technology firm Vesuvius said on Thursday price year-to-date revenue growth was broadly in line with internal expectations, leading the firm to forecast full-year group trading profits towards the lower end of analysts’ projections range.
Vesuvius said steel production and demand remained strong across its key markets in the quarter, with the exception of China, which experienced “significant month-on-month production declines” due to state intervention.
Foundry end-markets across most regions were also said to have remained strong, with the exception of the automotive industry, where, despite “robust demand”, production growth “significantly underperformed expectations” due to the continued global shortage of semi-conductor chips and broader supply chain difficulties.
“These challenges are now expected to persist well into 2022 with automotive market production forecasts revised materially downwards as a result,” warned Vesuvius.
However, Vesuvius said it had “successfully implemented” price increases during 2021 in order to offset the ongoing impact of “much higher freight and raw material costs”, which had continued to increase in recent months.
“Whilst the inevitable lag between cost and selling price increases has negatively impacted year to date profit margins, at current raw material and freight costs the selling price increases we have achieved will offset all of the cost increases incurred and restore margins as from year-end,” said Vesuvius.
“We remain confident that if costs increase further, we will be able to institute additional price rises to offset any adverse impact to our results.”
As of 0945 GMT, Vesuvius shares were down 0.25% at 468.61p.
