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Records tumble at Victrex

Victrex shareholders’ pockets will be bulging again following another set of record results from the specialist plastics supplier. Hot on the heels of last year’s special dividend, the cash rich company is upping the interim payout by 25 per cent.

That decision looks well founded as half-year profits shot up 57 per cent, aiding an increase in cash flow from operations to £41m (2010: £36.2m). The global recovery remains on track and growth in Asia’s industrial machinery sector provided a big boost to sales volumes. A rush for oil and gas in this time of high fuel prices is also working in the group’s favour.

Motor manufacturers, meanwhile, are clamouring for its weight-saving products, widely used in high-tech luxury cars, as are semiconductor firms. Not to be outdone, Victrex’s smaller medical products division Invibio had its best ever half. Revenues there jumped 10 per cent and operating profit rose 7 per cent.

And business shows no sign of slowing down with the strength enjoyed during the first half continuing into the second half. Victrex’s thermoplastic polymers are still highly sought after by companies keen to cut weight and improve performance.

Peel Hunt is forecasting full-year profit before tax of £97m, EPS of 84.4p and a dividend of 30p (2010: £74.9m/64.4p/25p), rising to £107m, 94.5p and 33p, in 2012.

VICTREX (VCT)

ORD PRICE:1,437pMARKET VALUE:£1.2bn
TOUCH:1,435-1,437p12-MONTH HIGH:1,489pLOW: 893p
DIVIDEND YIELD:1.9%PE RATIO:18
NET ASSET VALUE:230pNET CASH:£43.3m

Half-year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20108930.826.86.4
201110848.342.48.0
% change+21+57+58+25

Ex-div: 8 Jun

Payment: 5 Jul

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More analysis of company results

IC View

Business continues to pick up at Victrex, yet the shares trade on under 15 times earnings for next year. Barring any global economic hiccups, the shares are good value.

Last IC view: Fairly priced, 1,327p, 7 December 2010

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