Victrex Plc - AGM and Q1 Statement
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AGM and Q1 Interim Management Statement
'Positive start but variable improvement trend; full year expectations unchanged'
Victrex plc, an innovative world leader in high performance polymer solutions, releases its first quarter (Q1) Interim Management Statement ahead of its Annual General Meeting (AGM) being held today. Q1 covers the period 1 October to 31 December 2020.
Overall, the Group saw a positive start to FY 2021. Although Q1 was slightly ahead of our expectations, performance remains variable by end market. Asia is seeing the most incremental improvement on a geographic basis, with a mixed performance in Europe and the US.
For Q1 as a whole, Group revenue of £68.7m was 1% ahead of the prior year (Q1 2020: £67.7m), with Q1 Group sales volume of 883 tonnes also being 1% ahead of the prior year (Q1 2020 877 tonnes). Since the 1 October 2020, FY 2021 on a year-to-date (YTD) basis is slightly lower than the prior year, reflecting January being robust but lower than the prior year.
End market performance
Across our end-markets, trading saw an incremental improvement from the low point of H2 2020, with Electronics being notably strong as increased homeworking supports demand for a range of smart devices. Performance in Automotive, Medical and Value Added-Resellers was broadly stable compared to the prior year period, with Automotive benefiting from new application growth and some cyclical recovery, and Medical continuing to see a gradual improvement in procedures, largely in Asia. Whilst Energy saw some limited improvement from the low point of H2 2020, performance was lower than the prior year period. Aerospace remains challenging on a short-term basis.
As previously communicated, we continue to see little evidence of any material slowdown in our pipeline of 'mega-programmes'. We remain fully focused on delivering specific milestones as we move closer to greater commercialisation.
Victrex retains a highly cash generative business model, with our cash position improving since the end of FY 2020. Net cash of £84.4m at 31 December 2020 excludes cash ringfenced for our Panjin VYX facility in China, in what will be a year of high capital expenditure totalling up to £50m for the Group.
Brexit, inventory and supply chain
Following the Brexit trade agreement, which took effect from January 1st 2021, the Group has seen no material issues in its supply chain. High service levels are being maintained for customers, with continued tariff free access into the EU.
Whilst our inventory levels remain high, we are on plan to unwind sales inventory through the remainder of FY 2021, which will start to benefit our working capital position.
We have sustained our proactive approach to managing the impact of COVID-19 with the safety, health and well-being of Victrex employees being our highest priority. Our COVID contingency plans remain in place and our supply chain has been unaffected, enabling us to continue to meet our customers' needs in full. Our financial position remains strong and the outlook is starting to improve as some signs of recovery emerge in several of our end markets.
Jakob Sigurdsson, Chief Executive of Victrex, said: "This is a positive start to FY 2021 and we continue to see incremental improvement across several of our end markets.
"Nevertheless, the incremental improvement trend may remain variable and our assumptions are that we will still see a weaker first half overall, compared to H1 2020 which ended strongly. Consequently, at this early stage, our full year expectations are unchanged.
"Our priorities remain the health, safety and well-being of our employees and delivering strong service levels for our customers. With sustainable products and a strong pipeline of growth opportunities, our Polymer & Parts strategy keeps us well positioned for the medium to long-term."