Weak global economic growth has weighed heavily on the cyclical industrial market. In the case of Morgan Advanced Materials (MGAM), which warned investors of tricky trading last November, a cutback in capital goods spending triggered a 7 per cent decline in adjusted cash profits in the year to December 2015.
The carbon and ceramic products manufacturer experienced a sharp slowdown in its core North American market during the second half of the year, leading to a decline in orders across key automotive, oil and gas and general industrial applications. Profits fell even harder in Europe, as solid demand for thermal insulation products used to reduce energy consumption and emissions was offset by weakness in all other businesses.
However, investors were largely aware of these issues, and more keen to hear details about the new strategy recently installed boss, Pete Raby. His plans to return the group to growth in challenging markets involves increasing efficiency, globalising the business structure and investing in staff and product development. Judging by the initial jump in the share price, investors are confident that these measures will eventually succeed.
Bloomberg consensus forecasts give adjusted EPS of 18.7p, up from 17.6p in 2015.
| MORGAN ADVANCED MATERIALS (MGAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 231p | MARKET VALUE: | £659m | |
| TOUCH: | 230-232p | 12-MONTH HIGH: | 375p | LOW: 188p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 52p* | NET DEBT: | 116% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.10 | 111.0 | 26.9 | 9.3 |
| 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 |
| % change | -1 | +87 | +341 | +1 |
Ex-div: 5 May Payment: 27 May *Includes intangible assets of 230m, or 81p a share | ||||
