Victrex plc- Interim Results 2022

9 May 2022

Victrex plc – Interim Results 2022

'Strong first half & volumes up 8%; underlying PBT up 10% in constant currency'

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 interim (unaudited) results for the 6 months ended 31^st March 2022.

Highlights:

Strong first half, volumes +8%

• Double-digit growth in Electronics, Energy & Industrial, VAR
• Recent improvement in Automotive, despite Semiconductor chip challenges
• Medical revenue +12% as elective surgeries return
• 6% increase in core application growth pipeline

 Underlying PBT up 3% & up 10% in constant currency

• Underlying profit before tax (PBT) up 3% at £48.2m
• Reported PBT down 6% reflecting £4.6m exceptional items relating to one off expensed ERP software implementation
• Gross margin broadly stable (improvement impacted by timing of inflation recovery & FX)
• Continuing action to mitigate inflation:
• Operational improvements offset inflation in H1
• Additional price recovery well advanced in H2

• Strong mega-programme growth pipeline
• Strong progress in PEEK Knee clinical trial, 15 implants & recruitment at halfway stage
• New business wins for next generation E-mobility programme
• Good progress in Magma; supporting scale-up in Brazil

• Strong cash generation drives growth investment & returns
• H1 2022 available cash¹of £41.9m*
• Good progress on new PEEK facility in China; commissioning in 2022
• H1 dividend of 13.42p/share

• Good progress on ESG strategy
• 100% renewable electricity at all UK sites
• Victrex joins Apple Clean Energy Supplier programme
• New Corporate Responsibility Committee established

^[1] Alternative performance measures are defined on page 12

*excludes £3.8m of cash ring-fenced in the Group's Chinese subsidiaries and includes £0.1m in 95-day notice deposit accounts

Jakob Sigurdsson, Chief Executive of Victrex, said: “This is a strong first half, with further improvement across all end-markets, good progress in our Medical business as elective surgeries return in greater numbers and improved average selling prices compared to the second half of 2021.

“Our attractive and differentiated portfolio includes sustainable products which bring environmental and societal benefit and, reflecting the value PEEK brings to customers, our core application growth pipeline increased by 6%.  Whilst volumes were strongly ahead and our initial price recovery programme is delivering on plan, we have faced further unprecedented energy, raw material and distribution inflation, as well as FX headwinds. Thanks to significant improvement in operating efficiency and better asset utilisation, first half margin was broadly stable, despite the additional cost inflation, which we are well placed to recover. Without these additional cost headwinds, margin would otherwise have improved closer to our target level.

“Cash generation remained strong, supporting growth investment and shareholder returns. We are also pleased to be making good progress at our new PEEK facility in China, in a year of high capital expenditure to support our future growth in that region. Full mechanical completion is anticipated during Q3 and, subject to current COVID restrictions in China, we plan to start commissioning thereafter. Alongside growth investment, we have declared an interim dividend for shareholders of 13.42p/share.

Outlook

“Our core business and PEEK offering continue to be strong, with a clear focus on increasing the proportion of sustainable products which bring environmental and societal benefit.

“For the remainder of FY 2022, we anticipate continuing volume growth, which is likely to see growth of a similar magnitude to the first half, although we are mindful of the potential for a changing global economic environment later in the year.  Mitigation plans for recovering additional inflation are making good progress although, as previously communicated, gross margin in the second half is likely to be slightly lower than the first, primarily as a consequence of currency movements.  Nevertheless, for FY 2022 as a whole, we remain focused on delivering good year-on-year growth.

“On a medium to long term basis, Victrex remains well placed, with a broad range of growth opportunities, a strong ESG agenda and a highly cash generative business model.”