A detailed update from Victrex (VCT) six weeks ago left no room for surprises in its half-year results. High demand from car manufacturers and for industrial equipment during a “very strong” second quarter drove volumes of super-strong plastic PEEK up 14 per cent. And the second half has started well too, says Anita Frew, who steps down as chairman in September. “Our expectations for the full year are well supported.”
That’s encouraging - unlike the 320 basis-point drop in the gross margin to 64 per cent. A softer sales mix and the strong pound get the blame; management says sales grew so fast in the last quarter that some were un-hedged. Manufacturing costs rose, too, so operating profit both at group and divisional level grew by a more modest 7 per cent.
Victrex’s PEEK business made £35.5m during the period. The material is found on every modern car - mostly in ABS braking systems - so rising automotive sales are crucial. They were key to a 15 per cent jump in European PEEK volumes and a 28 per cent surge in transport work. More PEEK is used on premium cars, and sales are rising fast at BMW, Mercedes and Audi. Volumes grew 6 per cent in the smaller US market, and by over a fifth in Asia, where transport and industrial demand picked up sharply.
Broker N+1 Singer expects full-year adjusted pre-tax profit of £103m, giving EPS of 95.5p (2013: £94.6m/86p).
VICTREX (VCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,730p | MARKET VALUE: | £ 1.47bn | |
| TOUCH: | 1,726-1,731p | 12-MONTH HIGH: | 2,042p | Low: 1,459p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 383p | NET CASH: | £79.4m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 106 | 45.7 | 41.7 | 10.35 |
| 2014 | 120 | 48.9 | 45.1 | 11.39 |
| % change | +13 | +7 | +8 | +10 |
Ex-div: 11 Jun Payment: 01 Jul | ||||
