Please stay connected. Your call will begin shortly. Thank you. Hello, good day, and welcome to the Vesuvius trading update call. I would like to turn the call over to the management team. Please go ahead. Good morning, everyone. My name is Patrick André. I'm the Chief Executive of Vesuvius, and I'm here this morning with Mark Collis, our CFO. to give you some update on our trading in the 3rd quarter and year to date. Before we start, As you know, we are operating under the takeover code. So for clarity, I will not be going to comment on the ongoing discussions with RHI other than to say that, as you will have seen the Pusu extension notice last week, now set for the 24th of November, the board is unanimously working very hard and with diligence to form an opinion on what would be the best interest of our shareholders. Now, to be back to our trading update, strictly speaking, important point is that our operational issues impacting North America are now largely addressed. Our production backlog has already been materially reduced. And we remain fully confident that those issues will be substantially resolved by the end of the year. Turning to the various business units, our trading inflow control is ahead of the same period last year. And fully in line with our expectations despite these operational difficulties in North America in particular. We continue to have a strong net pricing, positive pricing performance in flow control. Our trading in foundry division is also ahead of last year and in line with our expectation, with in particular continuing strong benefits from the MMS integration, the Morgan Crucible integration. Advanced Refactory, the Advanced Refactory business unit, however, remains challenging and impacted not only by the operational issues in North America and to a lower extent in India. Those will also disappear by year-end, but also by persistently difficult pricing environment in Europe. Globally, our steel market remains positively oriented outside of China with 3.1% growth year-to-date in September. And going forward, you may have seen the announcements by ArcelorMittal this morning, which is rather positive regarding developments in Europe starting in Q4, but mostly in 2027. Our own analysis is in line with the analysis of ArcelorMittal. We— the foundry markets remain positive in Asia and North America, but they also remain challenging in Europe and South America. No change in that respect globally as compared with what we communicated on at half-year. We remain on track to deliver our cost savings of at least £55 million by 2028. £10 million of those will be delivered this year in 2026. We also continue to make good progress in cash management with working capital intensity continuing to decrease, and we expect to continue to do even more than that going forward. Now, all this being taken into consideration, we expect our trading profit in 2026 to be broadly in line. with the one of 2025 on a constant currency basis, and this despite the operational difficulties in North America and to a lower extent in India. I now propose to open the floor for questions. Thank you, sir. And if you'd like to ask a question, please press star 1 on your telephone keypad. If you change your mind and want to withdraw your question, it's star 2, and please ensure your lines are unmuted locally as you'll be prompted when to ask your question. So to ask a question, please press star 1. But the first question coming from the line of Stephan Klepp from BNP Paribas. Please go ahead. Yeah, hi, good morning. I have 2 questions, please. Can you go a little bit more into details how the unwind of the operational issues is proceeding? I mean, you're saying you're on track. It's going to not give any issues for 2027. But what have you done? I mean, we went quite into detail what was going wrong in terms of having the capacities, having not invested enough. Having the manpower to execute in North America. So where are we there? And then secondly, If we think about your European business, can you talk to us about— I mean, you mentioned ArcelorMittal, but can you talk to us about— can you tell us a little bit about how you see the business in Europe developing? Earlier in the year, you said that European clients are getting ready to ramp up their production again. Where are we there? And how are things proceeding for you in Europe? Because you said it's still subdued. Thank you, Stephan. Good morning. On your first point, we are doing what we said we will do, meaning first we are catching up in maintenance in our key plants, CapEx/maintenance in our key plants. This is not completed as we speak, but very well advanced. And we have a plan. You cannot do everything in 2 days. So we are completely on track with our catch-up plan regarding maintenance and CapEx in our plants. And it shows already. We expect further improvement in the weeks ahead, but already today, the production capabilities of the key plants which were the most affected in North America is already significantly better than what it used to be at half year. And considering the positive progress that we have already made, we are quite confident that by the end of the year, the production capabilities of those plants will have been reestablished at the level where we want it to be and where we need it to be. What it means is that in practice, our production backlog that we had accumulated during the first half is now It's still not completely eliminated, but it has very significantly decreased as compared with what it used to be at half year. And based on the current trend, we are confident that it will have been eliminated by the end of the year. Another important point is that we have been hiring many competent people in our operations to fill the vacancies, upgrade some positions when they needed to be upgraded. I would say probably to say today as we speak, 75% of our people upgrading and complementing needs have been addressed. We have another 25% to do by the end of the year, but considering the pace at which we are progressing, I'm also confident that it will be okay. So globally, we are on track to solve these operational problems by the end of the year, which means that our operations in North America should not be a drag anymore on our volume performance as from the end of the year, we should be able to satisfy all of the demand which will be addressed to us going forward. Can I have a follow-up on this one, please? Sorry, yes, please. Can I have a follow-up on this one? Okay, so you have been upgrading positions and hired more staff. Is it meaning that because you talk about volume, it's not a or not an issue anymore. Is that meaning that you're going to have a lower margin quality in the North American market going forward because the labor market for blue-collar has been running quite hot and there's obviously labor cost inflation, or will you be able to get back as well to the desired margin level that you should see in North American operations? Yeah, it's the opposite. The margin will increase significantly in North America because the fact that you add a little bit of operational costs because you hire the right people. You know, hiring the best people is the best investment you can do in the business. It pays off. That's the best rate of return that you can get in the business. And clearly, the fact that hiring the best people not only allows you to better run your plants and increase capacity, satisfy demand, and we know You know that leverage in our business is extremely high, meaning that the contribution margin on incremental sales is extremely high. Significantly higher than the average profitability. So when you can increase volume, you increase profitability. And at the same time, when you have the good, the right people, the good people in your plants, that allows you to progress faster in your cost reduction initiatives in your plant because you need brains in your plants to progress in cost reduction initiatives. Cost reduction is not about reducing people, and in particular, not reducing management in the plants. Reducing cost is about investing in management in the plant to have the right level of quality of people and brains in the plant to develop cost reduction initiatives. Super, thank you. On your second question regarding the European business, again, I could not summarize it better than what ArcelorMittal did this morning. Q3 in Europe in steel was still relatively soft. The Q3 steel production in Europe was, if my numbers are correct, on or around 1% below last year. However, it was not unexpected because we knew that some inventories had been accumulated before the deadline of the 1st of July of the new European regulations and protection measures. And so it's only starting in Q4, but mostly in '27, that we were expecting to see the benefits of the new EU steel safeguard measures introduced as from the 1st of July. Again, we don't have a crystal ball. We have an opinion on this, a very humble opinion on this, but it looks like this opinion is clearly being shared. by some actors which are even more aware of what is happening on the market than us, like our customers, and in particular ArcelorMittal, because our vision of the market on the fact that things should start. We don't see Q4 as being a fantastically good quarter, but we should start seeing some first amelioration, improvement in Q4. and accelerating in '27. And this is more or less what ArcelorMittal said this morning. Again, maybe we are all wrong, but we at least, we have the same vision. Yeah, thank you so much. As a reminder, if you'd like to join the queue for questions, please press star 1 on your keypad. The next question comes from the line of Lacey Midgley from Bloomberg, please go ahead. talk a little bit about how much of the previously lost business has actually been won back? And I think in July you kind of discussed a 6 to 12 month timeframe for customers returning. Any sort of update there would be helpful. Secondly, on advanced refractories, Just trying to get a sense here of what proportion of weakness is the operational versus structural pricing share pressure. You've talked a little bit on this. I'm just trying to think about Europe pricing. and stabilizing and whether we should expect sort of further weakness into 2027. OC first, please. Morning, Patrick. Thanks for the time this morning. The questions, 2 to start with, I think. Firstly, on flow control, can we just Thank you very much. Regarding flow control, we have the— what we have regained so far is a very minor part of of— it's not that we had lost, what we could not deliver, which is not exactly the same thing as losing. So we have started regaining, but very— in '26, it will be only a minor part, which shows, by the way, the potential for '27, because when in '27 we will be able to to accept all requests addressed to us without limitation and gain market share and be more have more possibilities to gain market share. I expect a significant improvement in, in '27, in particular in North America. So, but for the time being and for '26, yes, we are regaining, but it's only a very minor part because this will mostly be for '27. Regarding advanced refractory, in India, it's really 100% the operational issues. In North America, it's also 100% the operational issues. In Europe, we have no operational issues. It's market. So the I expect going forward significant improvement in what are the 2 most— the 2 key regions for us in advanced refractory, which are Asia, India and North America, because this is really 100% an issue of operational problems. Europe, is more structural because then the competition and price pressure in Europe, especially with increasing Chinese imports, is more structural. But we are adapting by restructuring in Europe and adapting our cost base to the circumstances. which we see in Europe. That's helpful. Thank you. Can I take one more, or just one point I would like maybe to, to add as my answer is that in Europe, flow control is doing very well. So it's— we do not have at all the same difficulties in flow control than in advanced refractory in Europe. Flow control is doing extremely well in Europe. Understood. Perfect. Thank you. Very quickly, just on leverage, if I can. I think it's obviously similar to the half year despite that working capital improvement. Any sort of main Q4 kind of items that we should be thinking about unwinding or improving from here? And any sort of thoughts on kind of what the leverage range we should be looking for at year-end, if you can give any? Any sort of comment on that would be also useful. Thanks. Yeah, hi, it's Mark here. So yeah, as you rightly say, we saw improvement in working capital intensity in the period. So we are down below 23% now. Heading into our kind of long-term target of 21%. Leverage is pretty much consistent, bang on actually, at the half year. My— we will see further absolute improvement in working capital because December is a quiet, quiet month. But typically, the H2 is always kind of similar or sometimes a few million less than the H1, just from a seasonality point of view. So I would expect leverage to basically be bang on the number at the end of the year. the half year and last year. So on or around 2, with the ability to perhaps maybe do kind of 1 tick less if we have a good working capital improvement. That's really helpful. Thanks, Mark. Thank you both. Our next question comes from the line of Mark Fielding from RBC. Please go ahead. Yeah, morning. Actually just want to really sort of expand to a degree on the answers that Patrick was just giving in terms of sort of the moving parts. I suppose I'm just trying to conceptualize and think about how we move into 2027. And, you know, if I think about the fact that, you know, with the revised guidance today, the sort of organic change to consensus this year has been, you know, around 25 million downwards. And there's obviously been a mix of the initial supplier quality issues in the US, followed by the wider operational issues, as well as the operational issues in India and the advanced refractories pricing. So I suppose what I'm trying to get a sense of is how that how the headwind, you know, that $25 million, basically how it breaks up. Because obviously it feels like the operational issues in the US are largely resolved. India is getting better, but I don't quite get the same feeling that that's all just going to be perfect as we head into next year. But I suppose it's basically I'm trying to work out the building blocks that I add back into next year versus the bits that are more permanent. Thank you, Mark. As you know, we are not— we are never at this stage giving any guidance for 2027. This will be more when we will announce our full year '26 results beginning of next year, when we will know more. However, a few qualitative reasoning that I could, I could give. First, in terms of markets, we, we do not see any sign of weakness for the time being, but anytime, any sign of weakness in North America or in India and the European markets. Our perception, as I mentioned earlier, similar to the one of ArcelorMittal, is that it should get better next year. How much better is anybody's guess at this stage. We will comment on that when we comment on beginning of next year when we know more. But, but the direction of travel is, is relatively clear. Our operational issues, are on the way of being solved, both in North America and in India. And, and we never had any operational issues in India. So when you put all these together, the direction of travel qualitatively is clearly positive between '26 and '27. And regarding the competitive pressure for advanced refractories in India, this will— is here to stay. But we have also a certain number of ongoing actions which will produce their full results as from Q1 next year, which will go a long way to adapting or cost base of advanced refractory to the new reality of the European markets. So I will not comment further. I will pass over to Mark to to add anything, but the direction of travel, which is what I— the only thing I can comment on, is clearly positive between '26 and '27. Yeah, I think— hi, Mark. I think just a few things I would add to just give a bit of context and color. So I mean, I think it's important to recognize that despite a challenging year, we're ahead in flow control and foundry. And that doesn't happen by accident. That's, that's good pricing and good management of the cost base. So we recognize we've lost a bit of volume in flow control. In terms of market share. But the reality is where we've had the issues in North America, we are still making as much money in North America this year than last year. So as we've always touched said, what we've been impacted by is the opportunity that we've lost as opposed to having gone backwards, without trying to really understate the challenges that we've had. But it's really been a lot about lost opportunity rather than lost profit. I think the other thing that's important to note is the issues in India, while frustrating, are probably in the order of a couple of million. So When you, when you look at our Indian performance, Again, it's frustrating, but we've not gone backwards. We've just not gone as far forward as we would like. And lastly, you know, I think we make a lot about the EMEA pricing pressure because it is a challenging market. But ultimately, EMEA Europe, which is where we are seeing the competitive pressures from Chinese imports, is 10% of our business. It hurts us financially because, you know, every million pounds of profit impact in Vesuvius with our kind of level of profitability margin and fixed cost matters to us. But fundamentally, if you can get beyond the operational issues, which we really firmly believe that we are, our business is in actually very, very good health. Working capital is coming down, leverage is down, or coming down rather. Flow control doing really well. Despite the operational issues in North America, foundry ahead, both in terms of MMS and in terms of the underlying business. We've just got a couple of black spots which we're trying to rub out. voraciously to kind of get things back on track. Sorry, I would just— I would also just add that, um, when we talk about India, again, the flow control business is going really, really, really well, the point that we're— we are running out of capacity. And if you like, I just clarify though, because in the statement, I mean, you're pretty clear that, you know, that you're progressing in terms of the operational issues in North America. I know you also make a comment on India, but Is it equally going to be as completely resolved at the year-end, or is it a little bit more— I know it's small, but some ongoing bits that probably take a little bit into next year to fix as well? We, uh, Today we are on track. We have another 1.5 to 2 months to go, but today we are on track to resolve this by the end of the year. And in particular, in terms of capacity availability, we are confident that this will be solved by the end of the year. Seen from today, but you, you're right, you are always right to say there is another 1.5 months to go. But, uh, but seen from today, uh, all, uh, all lights are green. So, you know, And we're having serious conversations about needing to invest further in our flow control business in India. Just to be clear, we are not running out of capacity, but at the pace at which we are progressing, at the pace at which we are progressing, we We now— we have now engaged engineering studies to be able to increase even further our capacity in flow control in India. Because we can increase at a very low cost. We have still some marginal expansion opportunities, quite large marginal expansion opportunities. in flow control in India, and we are now seriously thinking about activating them so that we can put online this new capacity in in '28-'29 to be able to continue to progress at the same pace at which we are progressing today. So, so it's rather good news. Yeah, it's very good news when the CFO worries about running out of capacity. But my point is, it's going very, very well. We can see future demand. We can see the need to invest. And then you look at the Advanced Refactories business. Again, it's disappointing because you don't want to have ramp-up issues and missed opportunities. But the level of profit that we're missing probably is in the region of a few, you know, it's in single-digit millions in AR. So we're not looking at some kind of disaster in India. We're looking at a frustrating level of profit that we're missing as opposed to a major issue in that particular part of the business, because ultimately it's It's half of our— it's the smaller half of our Indian business. The other part is going really, really well. And this Visakhapatnam plant, once these operational issues will be solved by the end of this year, will be a fantastic asset for the growth of Advanced Refactories in the coming years in India to follow the growth and I hope outperform the growth of the market. So So the strategic interest of this is not because you have a few hiccups during a few months in the ramp-up on the plant, which is not completely unheard of in the industry. that it jeopardizes the strategic interest of this, what I believe will be a fantastic new plant in Vizag. And sorry, if I can just clarify one thing. I totally understand that obviously you're not guiding on 2027, but when I think about the profit warning back in July and the roughly $20 million impact that you cited was sort of 3 quarters broadly operational issues, 1 quarter the competitive pricing. I mean, all the comments you're making suggest to me that as we move into next year, the majority of that operational issue impact, therefore about $15 million, that just goes away, admittedly maybe with a time lag on some of the sales you have to win back, etc. There's nothing else in that bit. Obviously, the pricing bit is the pricing bit. I think, as always, Mark, you are very good at reasoning, but I will only confirm your reasoning when we will talk about 2027, beginning of next year. But I can understand the logic of your reasoning. Ja, ik denk dat we niet. You say timing is the issue around sales. That's the very— that's the hardest thing to predict, is how quickly do you regain, um, you know, how quickly can you, can you recapture unmet demand. That's always the question. It's hard to estimate, particularly this far out from the year end. and into next year. Thank you. Thank you. There are no further questions, so I'll hand back over to your host for closing remarks. Thank you very much for, uh, to all of you for attending our call this morning. As always, Mark, Rachel, and myself will remain at your disposal should you have any further questions. And, uh, we are wishing you all a very good day. Goodbye. Thank you for joining. You may now disconnect.