25th Feb 2020 09:21
(Alliance News) - Morgan Advanced Materials PLC on Tuesday reported a rise in annual profit but warned the first half of 2020 will be hurt by the coronavirus outbreak.
In 2019, the ceramics and carbon manufacturer reported pretax profit of GBP109.7 million, 16% higher than the GBP94.9 million in 2018.
Revenue grew 1.9% year on year in 2019 to GBP1.05 billion from GBP1.03 billion.
Morgan declared a total dividend of 11.00 pence, flat on the year before.
"I am pleased with the further strategic and financial progress we have made in 2019, with our strategy continuing to deliver, enhancing our growth and profitability," Chief Executive Pete Raby said.
He continued: "In our third successive year of organic growth, revenue and headline operating profit grew 0.8% and 4.3% respectively in a challenging environment. We expanded our headline operating profit margin to 12.8% reflecting good operational cost control and the benefit from organic revenue growth in our faster growing market segments."
Morgan said it seen strong growth in its semiconductor & electronics, chemical & petrochemical, healthcare and aerospace segments, which more than offset declines in industrial and automotive markets.
Thermal Products revenue was down 3.0% to GBP467.5 million, but this was offset by 5.5% growth in Carbon & Technical Ceramics revenue to GBP582.0 million.
Looking ahead, Morgan said the deadly outbreak of the coronavirus in China will shave about GBP7.0 million of 2020 revenue.
"The outbreak of the coronavirus has led to an extended shut down of our manufacturing facilities in China. Our focus has been to take actions and precautions to help ensure the safety and wellbeing of our employees," Morgan said.
The company added: "Whilst we cannot be certain how long this situation will last, based on the delayed startup of our production facilities since the lunar new year break, we currently anticipate that this will have an adverse impact on 2020 revenue."
China represents about 10% of Morgan's annual revenue.
"The coronavirus has been spreading to countries outside of China, including to Italy and South Korean. Our plant in the affected area of northern Italy, we expect to be closed for two weeks," Morgan added.
Elsewhere in 2020, Morgan expects similar market conditions to 2019, with "weak" industrial and automotive markets persisting.
"However, we expect growth in our faster growing market segments to more than offset these market weaknesses," Morgan said.
"We expect to continue to make further strategic progress with the continuation of our sales effectiveness programme, improving operational efficiency and driving a number of key new product developments forward."
Morgan is guiding for "flat to modest" organic revenue growth at constant currency, with the first half "slightly below" due to the coronavirus.
Shares in Morgan Advanced Materials were 0.3% higher in London on Tuesday morning at 289.80 pence each.
By Paul McGowan; [email protected]
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