It isn't every day that a 12 per cent fall in operating profit to £48m is met with a 5 per cent share price jump and labelled "highly reassuring" by analysts. But Victrex (VCT) achieved just that, thanks to a confident outlook and a respectable battle with the well-documented slowdowns in the consumer electronic and energy markets.
Apple's de-stocking was chiefly to blame for a 42 per cent slump in electronics volumes, although management is confident of a swift turnaround. Second-half volumes of consumer electronics are expected to more than double, ahead of a raft of new smartphone launches.
Meanwhile, gross margins, which tightened by 2 percentage points during the period, may be lifted by the soon-to-be completed construction of new facilities. Aside from lowering expenses, this should also boost capacity and further lift the capabilities of the other businesses credited with delivering "robust" performances.
Most impressive was the transport operation. Volumes there rose 7 per cent off brisk demand for Victrex's fuel-efficient and resistant PEEK polymer solutions. The medical arm's performance wasn't so strong, although progress developing new programmes and the revenue potential in high-strength, lightweight subsea pipes has fuelled optimism.
Analysts at N+1 Singer forecast full-year adjusted pre-tax profit of £97.3m, giving EPS of 89.9p (from £106.6m and 97.9p in FY2015).
| VICTREX (VCT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,501p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 1,501-1,503p | 12-MONTH HIGH: | 2,142p | LOW: 1,294p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 428p | NET CASH: | £45.3m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 130 | 53.9 | 49.8 | 11.73 |
| 2016 | 117 | 47.5 | 45.5 | 11.73 |
| % change | -10 | -12 | -9 | - |
Ex-div: 9 Jun Payment: 1 Jul | ||||
