RHI Magnesita (LON:RHIM) reported full-year 2025 results marked by a weak demand environment, an unprecedented downturn in its industrial projects business, and meaningful foreign exchange pressure, offset by management-led “self-help” measures that supported a sharp second-half recovery and helped the company meet its guidance.
Management said it sees “no visible market recovery” in its order books and does not expect an improvement in demand before 2027. Instead, the company is relying on further structural actions—focused on costs, pricing discipline, footprint optimization, and administrative efficiency—to drive performance in 2026 and beyond.
2025 performance: guidance met despite weak markets
The board recommended a final dividend of EUR 1.20 per share, bringing the full-year dividend to EUR 1.80, in line with 2024.
CFO Ian Botha said adjusted EBITDA declined from EUR 407 million in 2024 to EUR 373 million in 2025, largely due to market-related pressures:
- Industrial adjusted EBITDA fell by EUR 74 million as high-margin glass and non-ferrous project volumes declined by 40% and fixed costs in specialized plants were under-absorbed.
- Steel adjusted EBITDA fell by EUR 41 million amid weak demand in Europe and Latin America and pricing pressure linked to Chinese steel and refractory exports.
- Currency reduced earnings by EUR 13 million in 2025, driven mainly by the US dollar and Indian rupee.
Management said self-help initiatives contributed EUR 70 million in 2025, including “pricing discipline, operational cost improvements, and SG&A reduction.” The Resco acquisition contributed EUR 25 million, including synergies.
A “year of two halves” driven by self-help actions
Executives repeatedly characterized 2025 as a “year of two halves.” The first half was described as one of the weakest periods on record, with adjusted EBITDA of EUR 141 million. In the second half, adjusted EBITDA increased to EUR 232 million, 65% higher than the first half and 7% above the second half of 2024, despite a EUR 19 million currency headwind in H2.
RHI Magnesita’s EBITDA margin rose from 8.4% in the first half to 13.7% in the second half. Management attributed the improvement to execution rather than any demand recovery.
Segment and regional commentary: steel weakness, industrial slump
In steel, management pointed to weak domestic demand in multiple regions and pricing pressure tied to record Chinese steel exports displacing local production. India was described as the main engine of global steel production growth (management cited approximately 10% growth), but the company said it did not capture the same pace of revenue growth due to price concessions and margin pressure, which executives attributed primarily to local industry overcapacity and “undisciplined” competitive behavior.
North America was highlighted as a strong performer, helped by Resco and organic growth. Management said that even excluding Resco, revenues rose 6% in North America against broadly flat steel production, supported by demand for its “Four Pro” offering and electric arc furnace-related solutions.
For the META region (Middle East, Türkiye, and Africa), the company cited a first-half revenue decline driven by reduced purchases from two key customers and added that the region also faced margin pressure from Chinese refractory imports. In the Q&A, Botha disclosed META revenue of approximately EUR 350 million in 2025 with nearly EUR 80 million of gross profit, and said the company’s forecast assumed about a 10% step-up in gross profit. Management cautioned, however, that the outlook could be affected by the escalation in the Middle East discussed at the start of the presentation.
In industrial, management described 2025 as “exceptionally weak,” with project volumes down 40% and revenues down 9%—the first contraction in that business since 2020. The glass business was described as being at a “historic low,” while cement was described as resilient. Management said the drop in high-margin projects disproportionately hit profitability due to high fixed costs at specialized plants.
Cash flow, working capital, and backward integration
Working capital intensity improved to 21.7%, marking the third consecutive year of improvement. The company said Resco and BPI added EUR 51 million of working capital, while the group reduced working capital by EUR 143 million—about half from management actions and half from currency movements—resulting in an EUR 84 million cash inflow from working capital.
Free cash flow was EUR 214 million. Net debt increased to EUR 1.5 billion, primarily due to the Resco acquisition. Management said liquidity remained strong and that about 70% of debt is fixed, with a weighted average borrowing cost of 3.3%.
Botha said the “backward integration” margin remained at cyclical lows—1.1%, contributing EUR 37 million of adjusted EBITDA—due to weak Chinese magnesite pricing, industry overcapacity, above-ground ore inventory, and under-absorption of fixed costs in raw material plants. Management said it has implemented measures to reduce costs and expand sales into non-refractory markets and expects a gradual profitability recovery from 2026 onward.
2026 outlook: currency headwinds, execution-led improvement
RHI Magnesita guided for EUR 435 million of adjusted EBITDA in 2026 on a constant-currency basis, representing a 17% increase versus 2025. After expected currency headwinds, reported adjusted EBITDA is expected to be approximately EUR 400 million, implying a margin of around 11.5%.
The company expects currency to be a larger headwind in 2026, estimating a negative impact of around EUR 35 million at current exchange rates. In response to investor questions, Botha detailed that the headwind includes an estimated EUR 25 million impact from the US dollar (citing EUR 4.2 million sensitivity per “one movement”) and about EUR 13 million from the Indian rupee.
Management said the earnings improvement is expected to come from four structural measures, each contributing roughly EUR 15 million on a like-for-like basis, including a gradual industrial improvement, pricing discipline and expansion of solution-based revenues, network optimization in Europe and the Americas, and further SG&A reductions supported by digital transformation and shared services.
Executives reiterated they are not assuming a market recovery to achieve guidance and expect leverage to reduce to around 2.6x by year-end 2026.
About RHI Magnesita (LON:RHIM)
RHI Magnesita is the leading global supplier of high-grade refractory products, systems and solutions which are critical for high-temperature processes exceeding 1,200°C in a wide range of industries, including steel, cement, non-ferrous metals and glass. With a vertically integrated value chain, from raw materials to refractory products and full performance-based solutions, RHI Magnesita serves customers around the world, with around 22,000 employees in 47 main production sites, 9 recycling facilities and more than 70 sales offices.
