Victrex Plc - Q1 Interim Management Statement
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AGM and Q1 Interim Management Statement
'Solid start to FY 2020 against weaker comparatives; expectations unchanged'
Victrex plc, an innovative world leader in high performance polymer solutions, today 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 2019.
Against much weaker comparatives, the Group saw an initial improvement during Q1. Automotive delivered good year on year and sequential growth, partly reflecting phasing, whilst Electronics and Value Added Resellers continued to see some signs of stability. Aerospace growth continued, although we are mindful of some headwinds within the industry this year, whilst Energy was notably weaker. In Medical, we saw a stable performance, with good growth continuing in Asia.
For Q1 as a whole, revenue of £67.7m was up 6% on the prior year (Q1 2019: £64.1m), with Q1 Group sales volume of 877 tonnes being up 7% on the prior year (Q1 2019: 822 tonnes). On a year to date basis, the Group remains ahead of last year, with performance in January being broadly in line with the strong January of the prior year.
Our pipeline of 'mega-programmes' remains strong. In Aerospace, we acquired the remaining equity in the TxV Aero Composites business from Tri-Mack. Our US facility in Rhode Island continues to manufacture a range of composite products, delivering commercial and prototype revenue. In Magma, Victrex is currently supporting the qualification pipe project for TechnipFMC's new Hybrid Flexible pipe targeted at opportunities in Brazil. Several smaller projects are also expected to deliver revenue this year, including in the Gulf of Mexico, North Sea and West Africa. In our PEEK Knee programme, we are moving closer to securing a second partner, as well as progressing discussions with major OEMs in this market.
Joint-venture investment in China
As previously communicated, Victrex completed a class 2 transaction on 13th January 2020, to create a joint-venture in China which will, subject to certain performance conditions, build and operate a 1,500 tonne PEEK manufacturing plant to serve that market. Commissioning of the facility is anticipated in early 2022, with Victrex's share of the overall investment expected to total £32m.
Victrex retains a highly cash generative business model, with no material change to its financial position since 30 September 2019. Currency remains a modest tailwind for FY 2020, although we note that Sterling's rerating over recent months now implies a growing headwind for FY 2021.
Jakob Sigurdsson, Chief Executive of Victrex, said:
"This is a solid start to FY 2020, although it is against weaker comparatives in the prior year.
"Whilst it is pleasing to see some year on year progress in Automotive, partly reflecting phasing, and continuing signs of stability in Electronics and Value Added Resellers, we note the weaker performance in Energy, in line with recent industry commentary. Overall, our expectations are unchanged and at this early stage, we continue to be focused on making year-on-year progress. For the medium to long-term, our Polymer & Parts strategy keeps us well placed to deliver our growth opportunities."