Falling automotive and European industrial revenues did not stop Morgan Advanced Materials (MGAM) growing over its first six months. Where peers have failed to offset the effects of a sluggish car market and a deteriorating outlook for industrials, an 8 per cent rise in the carbon and technical ceramics division’s turnover helped push group figures up on the previous half-year.
The slowing car market proved particularly damaging for the materials engineer’s thermal products division. Revenues here fell 30 per cent on the comparable period, driving down thermal ceramics profits. MGAM found some relief with ceramics in the North American and Asian chemical and petrochemical markets, as well as in iron and steel, but this ultimately failed to halt the division’s revenue decline.
Despite good performances in India and South America, molten metals turnover was flat and profit margins down, again owing to automotive headwinds in overseas markets, along with one-off restructuring costs and the annualised impact of prior year investments. The board appears unconvinced that conditions will allow the business to kick on over the coming months. Chief executive Pete Raby expects group revenues “to be broadly flat in the second half compared to the prior year,” citing the company’s assessment of business trends and orders. Management reaffirmed its outlook for the full year.
Bloomberg consensus forecasts point to full year 2019 cash profits and earnings per share of £169.6m and 27.4p respectively.
| MORGAN ADVANCED MATERIALS (MGAM) | ||||
| ORD PRICE: | 264p | MARKET VALUE: | £ 752m | |
| TOUCH: | 263-264p | 12-MONTH HIGH: | 370p | LOW: 234p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 81p* | NET DEBT: | 70% † | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 514 | 52.4 | 9.1 | 4.0 |
| 2019 | 526 | 54.7 | 12.4 | 4.0 |
| % change | +2 | +4 | +36 | - |
| Ex-div: | 31 Oct | |||
| Payment: | 22 Nov | |||
| *Includes intangible assets of £214m, or 75p a share. † Excludes lease liabilities of £69m | ||||
