Victrex Plc - Half-year Report

Victrex plc, an innovative world leader in high performance polymer solutions, today announces its interim results for the 6 months ended 31 March 2019.

 

 

H1 2019

H1 2018

% change (reported)

% change

(constant currency)1

Group sales volumes

    1,899 tonnes

2,256 tonnes

-16%

-

Group revenue

£145.7m

£166.6m

-13%

-12%

Gross profit

£87.4m

£106.3m

-18%

-13%

Gross margin

60.0%

63.8%

-380 bps

 

Underlying profit before tax (before exceptional items1)

£52.4m

£63.3m

-17%

-9%

Profit before tax (PBT)

£50.2m

£63.3m

-21%

-13%

EPS

51.4p

64.7p

-21%

-

Dividend per share

13.42p

13.42p

          0%

-

 

Highlights:

 

•     H1 impacted by Automotive, Electronics, VAR & Consumer Electronics contract

-    H1 Group sales volumes down 16% on weaker Auto, VAR, Consumer Electronics contract

-    Improving trend in Q2, with Auto stabilising

-    Solid performance in Medical, revenue +1% and +2% in constant currency

-    Underlying PBT in constant currency down 9%, reflecting weaker trading and opex investment

 

•     Good progress in 'mega-programmes'; new Aerospace alliance

-    Second PEEK Gears contract close

-    New 'Clean Sky 2' development alliance signed with Airbus

-    Patient recruitment imminent for PEEK Knee clinical trial

-    Investments in Surface Generation and Bond 3D; further downstream manufacturing capability

 

•     Cash generation drives investment & shareholder return

-    Operating cash conversion1 of 65%, impacted by Brexit stock build, giving available cash1 of £49.4m

-    Interim dividend held at 13.42p/share

-    Reviewing new capacity options; potential for first investment in FY 2019/2020

-    Debottlenecking opportunity commencing in FY 2019/2020

 

Jakob Sigurdsson, Chief Executive of Victrex, said: "As expected, Victrex saw a much weaker first half year, driven principally by Automotive, the associated impact on Value Added Resellers, the expected headwinds in Consumer Electronics, together with the impact of adverse currency, cost inflation and investment phasing.

"Our second quarter showed some signs of improvement, with Automotive starting to stabilise. We also saw a continuation of the improving trend in Medical, where revenues were ahead for the first half, including growth in our HA-Enhanced product. Actions taken to improve manufacturing efficiency and reduce cost also started to take effect.

"In our mega-programmes, we continue to deliver positive milestones, with our second major PEEK Gears project.  We also signed a notable development alliance with Airbus for the 'Clean Sky 2' programme, supporting the long-term development of composite solutions for the Aerospace industry."

 

"Looking towards the second half, headwinds in the form of currency and cost inflation will be broadly neutral, and incremental operating investment will be limited. We will also benefit from no bonus accrual. However, with some of our key industrial markets remaining weak, our base assumption is that any improvement would be gradual and back end weighted.  Overall, our expectations are that it will now be challenging to achieve year-on-year growth in the second half, compared to the prior year period. We remain well placed for the medium to long term, with strong structural growth opportunities, a healthy new product pipeline and a highly cash generative business model."