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Bumper payout for Victrex faithful

The specialist polymer supplier has rewarded shareholders with another special dividend despite flattish volumes
December 6, 2017

Shareholders in Victrex (VCT) were rewarded with a 68p special dividend even as the performance polymer specialist revealed broadly flat full-year sales volumes and a 3 per cent rise in turnover at constant currencies.

IC TIP: Hold at 2,395p

It never hurts to keep your owners sweet and a £56.1m year-on-year increase in net cash enabled management to get into the festive spirit. This was aided by favourable working capital movements and lower capital expenditure. That said, the development pipeline still looks promising, with targeted polymer products across a range of industrial and medical applications. New products accounted for 4 per cent of revenues, but the group is committed to increasing the rate to 10-20 per cent over the medium term. Near-term encouragement is provided by a supply agreement for its polymer gears with “a major European car manufacturer”, which kicks off in 2018.

Total volumes were constricted by a relative fall in activity in the non-core consumer electronics segment, although this is largely explained by a strong second half comparator in 2016. This had been well flagged and management was keen to point out the 15 per cent volume growth in the group’s core business, highlighting strengthening performance in the automotive, electronics (ex-consumer), value-added resellers and energy segments.

Bloomberg consensus gives adjusted EPS of 127p for the September 2018 year-end, rising to 130p in FY2019.

VICTREX (VCT)   
ORD PRICE:2,393pMARKET VALUE:£2.06bn
TOUCH:2,392-2,394p12-MONTH HIGH:2,607pLOW: 1,695p
DIVIDEND YIELD: 2.8%*PE RATIO:21
NET ASSET VALUE:557pNET CASH:£120m
Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201322294.686.543.0
201425310394.645.2
201526410698.146.8
201625210096.846.8
2017*29011111653.8
% change+15+11+20+15
Ex-div:1 Feb   
Payment:16 Feb   
*Does not include special dividend of 68p a share