Victrex (VCT) produced a creditable performance at the half-year mark, but the currency effects that bolstered reported figures have already started to dissipate with sterling’s rise against some of the group’s selling currencies. Consequently, the performance polymer manufacturer expects its average selling price for FY2018 to be in line with last year's £72.70 per kilogramme, as management estimates that 90 per cent of currency benefits will be weighted to the first half.
We probably sound a little 'glass half-empty' here; after all, sales volumes were up by a fifth and revenues by 15 per cent at constant currencies (CC). But a higher proportion of consumer electronics volumes and a contraction in underlying revenue at the medical (Invibio) segment, meant that the rise in group pre-tax profits (CC) came in at a more prosaic 2 per cent. Operating overheads were up a third reflecting “higher front-end investment” and increased accruals for the group’s bonus and incentive schemes.
Operating cash flow was equivalent to 106 per cent of operating profits, so Victrex exited the first half with net cash well ahead of the £85m special dividend threshold. However, we wouldn’t be surprised if inventories start to tick up ahead of the UK’s exit from the EU, as management might want to secure inputs in case of supply chain disruption.
JPMorgan Cazenove guides for adjusted EPS of 18.7p for the full year to September 2018, rising to 19p in FY2019.
| VICTREX (VCT) | ||||
| ORD PRICE: | 2,624p | MARKET VALUE: | £2.26bn | |
| TOUCH: | 2,608-2,626p | 12-MONTH HIGH: | 2,764p | LOW: 1,777p |
| DIVIDEND YIELD: | 2.1%* | PE RATIO: | 19 | |
| NET ASSET VALUE: | 516p | NET CASH: | £91.8m^ | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 131 | 50.1 | 46.4 | 12.2 |
| 2018 | 167 | 63.3 | 64.7 | 13.4 |
| % change | +27 | +26 | +39 | +10 |
| Ex-div: | 07 Jun | |||
| Payment: | 29 Jun | |||
| *Yield excludes special 68p a share payment for FY2017. ^Includes long-term deposits | ||||
