A programme to bump up margins in the face of subdued global industrial growth continues to bear fruit for Morgan Advanced Materials (MGAM), which supplies carbon and ceramic products for a range of industrial applications. Despite a dip in revenues, the group delivered underlying pre-tax profits of £43.8m - up 10 per cent on the 2013 interims, or 22 per cent on a constant currency basis.
Formerly known as Morgan Crucible, the company incurred £2.1m in restructuring and other one-off costs during the half year, down from £6.7m. These costs were linked to a programme designed to unify the various group businesses under a 'One Morgan' corporate structure, which also entailed a strategic re-organisation into geographical regions.
Morgan has now either exited or sold off around half of the low-margin units highlighted in a portfolio strategy earlier this year. So far, the result is that the cash margin has risen to 13 per cent, from 12 per cent a year earlier. There's still scope for improvement ahead of the year-end; management has a further £25m of low-margin businesses to improve or ditch.
Against this backdrop of rationalisation, the group has just completed the acquisition of Porextherm Dammstoffe, a Bavarian producer of micro-porous insulation materials, for an enterprise value of €26.5m (£20.9m), including assumed debts of €8.8m.
UBS expects earnings to remain flat for 2014 at 21.4p a share, rising to 24.3p in 2015.
| MORGAN ADVANCED MATERIALS (MGAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 301p | MARKET VALUE: | £858m | |
| TOUCH: | 293-302p | 12-MONTH HIGH: | 367p | Low: 280p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 79p* | NET DEBT: | 74% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 486 | 35.7 | 8.5 | 3.8 |
| 2013 | 448 | 37.5 | 8.4 | 3.9 |
| % change | -8 | +5 | -1 | +3 |
Ex-div: 5 Nov Payment: 28 Nov *Includes intangible assets of £245m, or 86p a share | ||||
