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Vesuvius Soars After Earnings Show Success of Focus on Steel

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Aug. 2 (Bloomberg) -- Vesuvius Plc, a U.K. supplier of molten metal flow engineering to steelmakers, rose the most in four years after first-half earnings beat analysts’ estimates, signaling its successful demerger from Cookson Group.

“Vesuvius has thumped our expectation out of the park with 71 million pounds of operating profit,” said Harry Philips, an analyst at Oriel Securities Ltd. who had predicted earnings of 58 million pounds ($88 million). He reiterated a buy recommendation.

The stock jumped as much as 20 percent to 530 pence, the biggest intraday gain since May 2009. Vesuvius was created from Cookson in December 2012. The shares were up 12 percent at 3 p.m. in London. Trading volume was more than three times the three-month daily average.

Vesuvius has disposed of its precious metals processing and solar crucibles businesses and said today it sold a low-margin refractory installation business in Canada. First-half sales declined 5.6 percent from a year earlier to 773 million pounds. The London-based company is affected by the level of global steel production, which it said fell outside China in the first half.

“We have delivered a strong performance, more than held our own, and outside of China outperformed a steel production decline,” Chief Executive Officer Francois Wanecq said today in a phone interview. “I am happy with what the business has achieved in the first half of the year of its new life.”

The outlook for second-half trading will become more clear after customers’ normal summer shutdowns in Europe, the company said. Vesuvius will expand to target technical services in the thermal-casting industry as it restructures, and has invested in new technology in South Korea for robotic casting, Wanecq said.

“It is hard to fault” Vesuvius’s results, Michael Blogg, an analyst at Investec Securities Ltd., said in a note. “However, the market background is not improving as we had expected.” Blogg placed his buy recommendation under review.

To contact the reporter on this story: Alex Pashley in London at apashley@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net

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