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Morgan Advanced's end markets collapse

The advanced materials specialist is witnessing a slow recovery in demand
Morgan Advanced's end markets collapse

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.

IC TIP: Hold at 220p

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:220pMARKET VALUE:£628m
TOUCH:218-220p12-MONTH HIGH:339pLOW: 169p
DIVIDEND YIELD:NilPE RATIO:69
NET ASSET VALUE:84p*NET DEBT:76%
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201952654.712.44
2020478-25.5-9.6nil
% change-9---
Ex-div:na   
Payment:na   
*Includes intangible assets of £196m, or 69p a share