12th May 2025 08:56
(Alliance News) - Victrex PLC on Monday warned of a "sizeable" forex headwind and lower sales volumes at its China facility as it reported lower-than-expected half-year profit.
In response, shares in the Lancashire, England-based polymer solutions provider for automotive, aerospace, energy and industrial, electronics and medical markets fell 7.3% to 839.00 pence per share in London on Monday.
Victrex reported pretax profit of GBP17.2 million for the six months that ended March 31, jumping from GBP3.3 million a year prior.
Half-year profit was reduced by total exceptional items of GBP24.7 million a year before, compared with just GBP6.0 million in the period just ended.
Underlying pretax profit fell 17% to GBP23.2 million from GBP28.0 million, which analysts at Jefferies noted was below the investment bank's GBP26.4 million forecast.
Revenue grew 4.7% to GBP145.9 million from GBP139.3 million, or by 8% at constant currency.
Sales volume rose 16% to 2,018 tonnes from 1,737 tonnes and by 14% in the second quarter to 1,120 tonnes from 986 tonnes, driven by Sustainable Solutions and the end-markets of aerospace, electronics, energy & industrial and value added resellers. Automotive remained subdued, Victrex said.
As a result, the company raised its guidance for volume growth for the full year, from a mid-single-digit percentage to high-single-digit.
But Victrex said revenue growth lagged volume growth as incremental sales came at lower than average selling price, driven predominantly by value added resellers.
Half year revenue in Sustainable Solutions was up 6%, while Medical revenue fell 1%.
Half-year gross margin fell to 44.1% from 48.0%, due to a softer sales mix within Sustainable Solutions, initial operating challenges of its China ramp-up, and a sizeable currency headwind. Excluding the China manufacturing facility, gross margin was 46.6%.
For the full-year Victrex expects gross margin will now be lower than guidance of around 50%, in a range of 45% to 47%.
Sales volume at the Victrex Panjin manufacturing facility in China, which started in the second half of the prior financial year, is expected to be "closer to" 50 tonnes in the full-year, compared to original expectations of 100 to 200 tonnes.
This will result in an additional profit headwind of up to GBP2 million in the full-year, compared to initial expectations.
Average selling price was GBP72 per kilogram, down 10% on the prior year due to the impact of sales mix, with weaker Medical but improvement from value added resellers. As well, currency moved adversely.
For the full-year, average selling prices are expected to be in a GBP72 to GBP75 per kilogram range, reflecting sales mix and currency and down from prior guidance of GBP75 to GBP80.
Victrex expects a "sizeable currency headwind" of around GBP8 million to GBP9 million on pretax profit for the full-year.
"Operational improvement in our China manufacturing facility is progressing, however, the full year profit headwind will be higher than previous guidance. These factors, and other previously guided headwinds, including FX, will constrain pretax profit growth for the second half...though we expect these to ease into the next financial year," said Chief Executive Jakob Sigurdsson.
He added that macroeconomic uncertainty is likely to continue for the remainder of the financial year but pointed out that the majority of Victrex's product portfolio is currently exempt from US tariffs.
Victrex maintained an interim dividend of 13.42 pence per share.
"As cashflow continues to improve, share buybacks remain an option for future shareholder returns, alongside special dividends, within our capital allocation policy," the company said.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.
Related Shares:
Victrex