"Our focus… has been on driving positive mix shift, delivering cost and operational efficiencies and making continued investments in technology and differentiation," says Kevin Dangerfield, interim boss of Morgan Advanced Materials' (MGAM). Against a backdrop of subdued global industrial growth, those measures helped the supplier of carbon and ceramic products widen underlying cash profit margins by 40 basis points to 13 per cent.
Most of these gains were made in Europe, where margins were boosted by a favourable sales mix, strength in the thermal ceramics business and previous restructuring efforts. Management's drive to focus on growth markets with attractive niches yielded constant-currency sales growth of 5 per cent here.
Despite weakness in China, all operating regions achieved underlying revenue growth. The group's core US market was a particular bright spot. Sales there rose 12 per cent off sturdy demand for thermal insulation technology in industrial, fire resistance and automotive applications. Morgan also more than doubled its net capital expenditure to £32m, reflecting continued investment in additional capability and capacity. That figure included the £12m spent acquiring a facility in Swansea, which was previously under a sale and leaseback arrangement.
Broker JPMorgan Cazenove expects adjusted EPS of 24.36p in the year to December 2015 (from 22.07p in FY2014).
| MORGAN ADVANCED MATERIALS (MGAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 340p | MARKET VALUE: | £969m | |
| TOUCH: | 338-339p | 12-MONTH HIGH: | 366p | LOW: 258p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 60 | |
| NET ASSET VALUE: | 59p* | NET DEBT: | 105% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 448 | 37.5 | 8.4 | 3.9 |
| 2015 | 469 | 49.2 | 11.4 | 4.0 |
| % change | +5 | +31 | +36 | +3 |
Ex-div: 5 Nov Payment: 27 Nov *Includes intangible assets of 230m, or 81p a share | ||||
