Vesuvius has released H1 results ahead of expectations. Key highlights include that pricing has offset lower volumes and that although trading profit is down 18% y-o-y it is up 14% sequentially. Steel is still weak with volume declines sequentially, but Foundry is recovering. Cash conversion is improving. Modest increase to FY expectations (high single-digit / c.7%). Results summary Revenue £995m (-3% org. yoy), trading profit £105m (-18% yoy) implying an ROS decline of 200bps yoy to 10.5%, EPS 24.5p (-25% yoy), leverage 1.0x, cash improved 114% to £71m. Weakened volume demand (-8%) in the steel market vs. H1 2022, was partially offset by pricing increases. Despite this, the steel business performed well due to resilience in pricing and technical differentiation. The foundry division continues to recover with trading profits improving 18% yoy and RoS improvement up 130bps. Outlook A better than expected H1 2023 performance has resulted in a modest increase to current market expectations. Pricing discipline is to continue into H2 2023 in the steel sector and the foundry business is expected to continue to recover as the destocking period comes to an end. Investment case Vesuvius has made strong progress 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 we believe that the valuation remains undemanding in relative terms.