RHI Magnesita (LON:RHIM) said its first-half 2026 earnings improved despite soft and volatile end markets, as pricing actions, plant-network changes and administrative cost reductions offset currency pressure and weak demand for high-margin industrial projects.
Chief Executive Officer Stefan Borgas said the company’s “self-help measures” were the main driver of the improvement, particularly in its steel operations. The company is advancing further initiatives across its raw-material facilities, refractory plant network and digital investments to support profitability through 2027 and beyond.
Chief Financial Officer Ian Botha said adjusted EBITA rose 17% year over year to €165 million from €141 million, while the adjusted EBITA margin increased to 10.3% from 8.3%. On a constant-currency basis, adjusted EBITA rose 42%, after a €24 million foreign-exchange headwind primarily related to the U.S. dollar and Indian rupee.
Adjusted earnings per share increased to €1.81, according to Borgas. The board declared an interim dividend of $0.60 per share, unchanged from the prior year.
Steel operations support margin improvement
The steel business remained resilient despite subdued global steel production and regional volatility. Steel revenue increased about 5% on a constant-currency basis, although volumes were slightly lower. Gross profit in the segment rose 17% at constant currency to €249 million.
Borgas attributed the improvement to price adjustments intended to recover higher energy, freight and labor costs, as well as fixed-cost reductions at European plants. The company also expanded its 4PRO customer-service and solutions model, which management said has helped reduce customer churn, support pricing and improve margins.
In China, Borgas said the 4PRO offering helped the business gain market share while maintaining price levels in a highly competitive market. The company is also developing a robotic ladle solution with local partners in China and has begun customer work with automation specialist Polytec.
RHI Magnesita said it temporarily lost market share in the United States and India. In India, management said it exited low-margin business to focus on more sustainable, 4PRO-enabled growth. In the U.S., an enterprise resource planning system rollout affected customer service levels and market share during the second quarter, though Borgas said both issues were beginning to recover.
Management expects steel to contribute an additional €25 million of earnings in the second half, supported by a stronger order book, particularly in India and the Middle East, Turkey and Africa region, as well as continued 4PRO progress.
Industrial-project demand remains weak
Industrial revenue fell 13% to €466 million, reflecting a decline in industrial-project activity from what Borgas described as an already historically low 2025 level. Lower project volumes hurt product mix and resulted in fixed-cost under-absorption at high-cost plants, especially in Europe.
The company said its cement, steel and non-ferrous businesses performed well, but the global industrial-project market remained challenging. Glass was particularly weak, while industrial applications also saw limited investment activity. Non-ferrous project activity was more resilient and met management’s expectations.
Customers postponed roughly €50 million of high-margin project revenue from the first half into 2027, while another €10 million shifted into the second half of 2026. Only a small number of projects were canceled, largely in the Middle East, according to Borgas.
Still, the company said its industrial-project order book has improved for the second half, supported by the Northern Hemisphere cement maintenance season. Botha said industrial operations are expected to contribute an additional €35 million in the second half, including €20 million from normal seasonal strength and €15 million of year-over-year improvement.
During the question-and-answer session, Borgas said more than half of the anticipated second-half industrial improvement had already entered production. The remaining orders were signed and in engineering or rollout stages but carried greater timing risk, particularly if customers defer capital spending late in the year.
Chief Customer Officer Gustavo Franco said individual projects can range from approximately €1 million to €2 million in revenue to €10 million to €15 million, depending on their scale. He said the company’s win-loss ratio exceeded 50% across most industries and reached about 70% in ferrous metals.
Cash flow and deleveraging remain priorities
Working capital increased during the first half as the company built raw-material inventory ahead of a stronger second-half order book. Foreign exchange added €22 million to working capital, while North American receivables rose €40 million following delayed invoicing after the ERP launch.
Net debt increased by €33 million to €1.528 billion, while leverage remained stable at 2.9 times net debt to adjusted EBITDA. Operating cash flow was €160 million and cash conversion was 97%.
Botha said the company expects the inventory build and receivables increase to unwind in the second half. RHI Magnesita maintained its expectation for working-capital intensity of about 22%, net debt of approximately €1.4 billion and leverage moving toward 2.6 times by year-end.
The company refinanced €800 million of debt during the period, increasing its weighted average borrowing cost to 3.5% at June 30 from 3.3% at the start of the year, primarily because of higher benchmark rates.
Full-year outlook maintained
RHI Magnesita reaffirmed its full-year guidance, forecasting adjusted EBITA of €435 million at constant currency and €400 million on a reported basis. The reported outlook incorporates an expected €35 million year-over-year foreign-exchange headwind.
The company continues to expect €15 million of EBITA improvement from pricing actions, €15 million from network optimization and further administrative cost savings. Management said it is identifying additional raw-material and plant-network initiatives to extend the benefits of its self-help program beyond 2026.
Borgas said the company expects industrial-project demand to normalize gradually over the next 12 to 24 months, while cautioning that the order book remains below historical norms and markets remain volatile.
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 over 20,000 employees in 65 main production sites (including raw material sites), 12 recycling facilities and more than 70 sales offices.
