Everything must go, it seems, at Morgan Advanced Materials (MGAM). To streamline its profile in the face of tough end-markets, the ceramics manufacturer has been hiving off non-core operations, including recent deals to sell its rotary business and its UK electro-ceramics unit. At the June half year, the group highlighted a rationalisation programme stretching from Swansea to Shanghai. That process remains in train with the group extending its debt maturity profile in the intervening period.
Whether this 'good housekeeping' has filtered through to operational performance is difficult to gauge, but full-year gross profit was 8 per cent in advance of 2015, while adjusted free cash flow came in at £48m, against £30.1m in the prior year. The latter metric would have pleased management, which remains intent on freeing up more capital for use in research and development work.
During the year, the group moved to a global structure with the establishment of six global business units. Revenue across the spectrum was boosted by currency translation effects, but profit performance was mixed, with the benefits of improving underlying margins at the carbon and technical ceramics segment, as well as the composites and defence business, held in check by margin compression within thermal products.
Prior to these figures, JPMorgan Cazenove forecast adjusted profit of £119m in 2017, leading to EPS of 20.7p, rising to £128m and 24.9p in 2018.
| MORGAN ADVANCED MATERIALS (MGAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 304p | MARKET VALUE: | £866m | |
| TOUCH: | 303-304p | 12-MONTH HIGH: | 317p | LOW: 200p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 42p* | NET DEBT: | 147% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.01 | 76.7 | 18.7 | 10.0 |
| 2013 | 0.96 | 64.0 | 14.8 | 10.5 |
| 2014 | 0.92 | 31.5 | 2.7 | 10.9 |
| 2015 | 0.91 | 59.0 | 11.9 | 11.0 |
| 2016 | 0.99 | 87.9 | 18.4 | 11.0 |
| % change | +8 | +49 | +55 | - |
Ex-div: 4 May Payment: 26 May *Includes intangible assets of £240m, or 84p a share | ||||
