Morgan Advanced Materials (MGAM) - formerly known as Morgan Crucible - has yet to recover from last summer's sudden slump. Yet, at least trading is no longer deteriorating. At constant currencies, revenues were flat on the difficult second half of last year, and trading margins across the group rose from 11 to 12 per cent. That gave a boost to earnings, but underlying EPS of 10p remain well below the 13.8p clocked a year ago. Chief executive Mark Robertshaw reassured the market by increasing the interim dividend by 6 per cent.
The margin improvement was achieved entirely in Europe, the epicentre of last year's slump. Sales bounced back slightly, and the company has also cut costs by closing a number of sites serving the tougher electrical and defence markets. Emerging markets, which proved more resilient last year, weakened - at constant currencies, sales were 6.4 per cent lower than in the second half of 2012. Mr Robertshaw says clients are delaying major projects due to tight credit. Trading was broadly flat on the second half of 2012 in North America, Morgan's most profitable region.
Globally, the more buoyant aerospace and medical markets, to which the company sells niche high-performance ceramics such as hip replacement balls, were offset by weakness in other sectors, including defence and renewable energy - a situation Mr Robertshaw expects to continue into the second half.
Broker Investec forecasts adjusted pre-tax profits of £101m and EPS of 24p for the full year (from £96.2m and 23.2p in 2012).
MORGAN ADVANCED MATERIALS (MGAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 301p | MARKET VALUE: | £858m | |
| TOUCH: | 300-302p | 12-MONTH HIGH: | 310p | LOW: 220p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 91p* | NET DEBT: | 73% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 533 | 36.0 | 12.3 | 3.6 |
| 2013 | 486 | 25.5 | 8.5 | 3.8 |
| % change | -9 | -29 | -31 | +6 |
Ex-div: 23 Oct Payment: 29 Nov *Including intangibles of £269m, or 95p per share | ||||
