(LON:VSV) has warned that full-year profits could plunge up to 9% as the engineering firm’s profits continue to be battered by weakening global steel production.
The mid-cap company, which specialises in casts for the steel industry, highlighted in July that trading profit had stagnated due to “challenging markets” in the first half of the year.
End markets have continued to deteriorate in the second half of the year, particularly in the Europe and Africa region, and full-year trading profits will fall to between £180mln and190mln it said today.
That compares to £197mlm last year and implies between an 8% to 18% profit slide in the second half.
“Steel producers have announced annualised production cuts equivalent to c.4% of 2018 volumes since the end of June.
“Over this same period, IHS Markit has lowered its 2019 light vehicle production forecasts and it now expects a 5.6% decline versus 2018.”
More costs are being cut as a result with savings of £5.8mln in the first half to rise by a further £16mln by 2021.
“Despite the short-term end-market weakness we are experiencing, we see no structural change to the positive, long-term fundamentals of our end markets and remain confident in our ability to achieve a 12.5% return-on-sales,” said Vesuvius.
Shares were down 13% at 374p in early trading.
Read More: Vesuvius PLC issues profit warning as global steel production stalls
