FY20 results are modestly ahead of profit expectations. Our key highlights are: strong cash, good cost savings and an improving outlook – all of which underpin a significant increase in the dividend. FY20 results – positive FY20 revenues declined by 14.7% (-12.7% at constant currency) to £1,458m. The adjusted operating margin contracted 360bps to 7.0% resulting in operating profit of £101.4m (INVe £98.2m), down 44.1% (-43.3% at constant currency). EPS decreased 48.6% to 23.2p (INVe 22.3p / consensus 22.7p). A dividend of 17.4p shows a significant increase. Cash conversion was strong at 173% and net debt was £175.1m (vs £245.8m last year), representing 1.2x EBITDA. Outlook – clear signs of recovery There are clear signs of recovery in both its Steel and Foundry end markets and this should accelerate through the year. This, along with a leaner cost base, gives management confidence in a significant financial improvement in 2021 (INVe FY21E c35% profits growth). Investment case – cyclical recovery play Vesuvius has come a long way over the last few years with a proactive management team showing how a business with cyclical commodity customers can still generate good and reliable value. The long-term investment case is centred on its strong positioning for changes taking place in Chinese and Indian steel, as well as for growth in traditional markets, and we expect management to drive continuous improvement in the business. It has potential for rapid earnings momentum and valuation remains undemanding relatively. The share are trading on a FY21E PE of 16.4x and EV/EBITDA of 9.0x, falling to 15.1x and 8.4x respectively in FY22E.