Victrex plc Preliminary Results 2021

6 December 2021 

Victrex plc – Preliminary Results 2021

'Solid & sustainable recovery: FY volumes +25%, strong cash generation & 50p/share special dividend'

Victrex plc is an innovative world leader in high performance polymer solutions, delivering sustainable products which support CO2 reduction and bring environmental and societal benefit in multiple end-markets. Today's announcement covers our preliminary results (audited) for the 12 months ended 30 September 2021.

Highlights:

• Solid & sustainable recovery; FY volumes +25%

• FY sales volume up 25% driven by improving end-markets
• Double-digit YoY growth in Electronics, Energy & Industrial, VAR
• Improvement in Automotive with volumes +18% despite Semiconductor challenges
• Medical revenue up 3% as elective surgeries gradually return
• 9% increase in new application targets

• Underlying PBT up 21% driven by strong volume growth & cost management

• Underlying PBT up 21% at £91.7m, reported PBT up 46% at £92.5m
• Gross margin stable at 54.0% despite weaker sales mix, FX and inventory unwind

• Further progress in 'mega-programme' growth pipeline & additional milestones

• Strong validation of PEEK technology through sale of Magma interest to TechnipFMC; opportunities in traditional & new energy including hydrogen transportation
• Good progress in PEEK Knee clinical trial; 10 patients now implanted
• Meaningful revenue of c£1m in PEEK Gears
• Mega-programme potential for E-mobility, with 50% increase in development programmes
• Good progress in Trauma joint developments

• Strong cash generation underpinning investment & returns; 50p special dividend

• FY 2021 available cash¹ of £99.9m** underpinning c£40m capex; further investment focused on China in FY 2022
• Operating cash conversion¹ 100%
• Civil construction progressing on plan for new PEEK facility in China; commissioning in 2022
• Post-Brexit inventory unwind benefiting cashflow; total inventory down £28m to £70m
• Dividends returned to pre-COVID-19 levels & special dividend of 50p/share

• Further enhanced ESG strategy; products bringing environmental & societal benefit

• Signatory to Science Based Target initiative (SBTi), reflecting 2030 net zero goal***
• New ESG criteria added to Executive remuneration

1 Alternative performance measures are defined on page 16

**excludes £12.5m of cash ring-fenced in the Group's Chinese subsidiaries and includes £37.5m in 95-day notice deposit accounts

*** Scope 1&2 emissions

Jakob Sigurdsson, Chief Executive of Victrex, said:

“Victrex delivered a solid and sustainable recovery during FY 2021, following the impact we saw from the pandemic in FY 2020. We saw strong volume growth in several end-markets and strong cash generation, supporting investment and shareholder returns.

“Automotive, Electronics and Value Added Resellers (VAR) were our standout end markets, with new application growth in our core business and notable milestones in our mega-programmes. These include TechnipFMC acquiring our equity in Magma as they prepare for scale up in Brazil, validating the technology for use in both traditional and new energy opportunities; good progress in the PEEK Knee clinical trial, with ten patients implanted to date; meaningful revenue in our PEEK Gears mega-programme; and a 50% increase in the number of development programmes for E-mobility, which is now a mega-programme.

“FY 2021 saw a continued strong focus on the health, safety and well-being of our employees – with 80% of our global regions now seeing a return to site, backed by our Global Flexible Working Policy – as we navigated our business through the pandemic. We again delivered strong service levels for customers, with sustainable products which bring environmental and societal benefits, as reflected in our long-term ESG goals.

“With strong cash generation underpinning investment and shareholder returns, we are pleased to declare dividends back to pre-COVID-19 levels, alongside a special dividend for shareholders of 50p/share.

Outlook

“For FY 2022, at this early stage, our assumptions are for year-on-year progress in full year sales volumes, with several end-markets expected to see further recovery, including in Medical, which will support our sales mix. In addition to a sizeable currency headwind, like most industrial companies, we are facing increased raw material and energy costs, which will impact us particularly in the first half, although mitigation plans are progressing. We will increase our investment in innovation and will start to incur commissioning costs in relation to our new China facility, although better asset utilisation should support our margin. Overall, we plan to deliver year-on-year growth in FY 2022.

“With an attractive portfolio of short, medium and long term growth opportunities, a strong ESG agenda, including alignment to global megatrends and sustainable products which help CO2 reduction and support environmental and societal benefit, and a highly cash generative business model, the Group remains well placed for the medium to long-term.”

About Victrex:

Victrex is an innovative world leader in high performance polymer solutions, focused on the strategic markets of automotive, aerospace, energy (including manufacturing & engineering), electronics and medical. Every day, millions of people use products and applications which contain our sustainable materials – from smartphones, aeroplanes and cars to oil and gas operations and medical devices. With over 40 years' experience, we develop world leading solutions in PEEK and PAEK based polymers, semi-finished and finished parts which shape future performance for our customers and our markets, provide environmental and societal benefits, and drive value for our shareholders. Find out more at  www.victrexplc.com

A presentation for investors and analysts will be held at 9.30am (GMT) this morning via a conference call facility.  To register, dial +44 (0) 3333 000804 and participant pin 91122185#   Audio playback is available by dialling +44 (0) 3333 000819 and participant pin 425015823#   . The presentation will be available to download from 8.30am (GMT) today on Victrex's website at www.victrexplc.com under the Investors/Reports & Presentations section.