Morgan Advanced Materials (MGAM) is closing eight of its core manufacturing sites in response to a crash in aerospace and industrial demand. Facilities in the materials engineer’s technical and thermal ceramics outfits will be shuttered with the aim of saving £20m a year by 2022. It will cost £30m to enact these measures.
Morgan Advanced, which makes materials for the aerospace, automotive and industrial markets, was tipped into a half-year loss by a £63.4m impairment charge. Aerospace and automotive manufacturers including Boeing (US:BOE) have scaled back production volumes, and this has rippled across supply chains.
Almost all of the group’s impairment charge was attributable to write-downs across its two ceramics business arms, which together made up nearly two-thirds of Morgan Advanced’s half-year revenues. The group has, however, witnessed a small recovery in overall daily orders, which were down a fifth in June and July compared with last year, an improvement from the 30 per cent decline experienced in the preceding two months.
The consensus forecast for full-year 2020 earnings per share stands at 1.23p, rising to 20.94p in 2021.
MORGAN ADVANCED MATERIALS (MGAM) | ||||
ORD PRICE: | 220p | MARKET VALUE: | £628m | |
TOUCH: | 218-220p | 12-MONTH HIGH: | 339p | LOW: 169p |
DIVIDEND YIELD: | Nil | PE RATIO: | 69 | |
NET ASSET VALUE: | 84p* | NET DEBT: | 76% |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2019 | 526 | 54.7 | 12.4 | 4 |
2020 | 478 | -25.5 | -9.6 | nil |
% change | -9 | - | - | - |
Ex-div: | na | |||
Payment: | na | |||
*Includes intangible assets of £196m, or 69p a share |