Victrex made a strong start to its 2018 financial year, with a continuing positive performance in the Industrial business, offset by a slightly weaker performance in Medical.
Against a weaker comparative, Q1 revenue of £78.7m was 41% ahead of the prior year period (Q1 2017: £55.7m), with Q1 Group sales volume of 1,051 tonnes being 30% ahead of the prior year (Q1 2017: 810 tonnes).
Alongside continuing strength in Industrial, the Group’s Q1 performance also reflects three specific items which were not in the comparative period. These are the benefit from currency hedges taken on at the most favourable post-Brexit rates; sales from our Zyex acquisition; and a sizeable proportion of volumes for the large Consumer Electronics order, compared to negligible volumes in Q1 2017. Excluding these items, our underlying momentum is broadly unchanged from the positive performance we saw in the second half of 2017.
Victrex saw good performances across most end markets, with Electronics being the strongest performer and a steady start in Aerospace. Medical saw a weaker end to the quarter, although we continue to see progress in our innovative PEEK-OPTIMATM HA Enhanced product for the Spine market and outside the US.
Our pipeline of new products remains strong. We have now started supplying the first parts for our Gears mega-programme to a major European car manufacturer, whilst in Magma, a deployment of a 2.5km flowline by Tullow Oil in West Africa supports our expectations of growth this year.
Victrex retains a highly cash generative business model, with no change to its financial position since 30 September 2017. Currency remains supportive for 2018, with the most favourable currency rates coming through in the first half and a heavy bias towards Q1. Looking further ahead, Sterling’s re-rating currently implies an increasing headwind for 2019.
Outlook
Jakob Sigurdsson, Chief Executive of Victrex, said: “Victrex has made a strong start to 2018. If the strength in our Industrial business continues to offset weakness in Medical, it could offer a limited degree of upside potential to expectations, although it remains very early in the year and our underlying momentum is broadly unchanged from the second half of 2017.
“Our priorities for 2018 are to remain focused on driving growth, on cost efficiency and to show further progress in our Polymer & Parts strategy.”