5th Dec 2019 09:04
(Alliance News) - Victrex PLC on Thursday reported a sharp drop in revenue and profit on a weak sales performance, leading the polymer maker to cut its dividend.
In the twelve months to September 30, Victrex recorded pretax profit of GBP104.7 million, down 18% on the GBP127.5 million reported the year before.
Revenue fell 9.8% year on year to GBP294.0 million from GBP326.0 million.
The company lowered its total dividend per year to 59.56 pence, down 58% on the 142.24p distributed the year before.
"Our full year performance was in line with expectations, with good growth in Aerospace, Energy and Medical being offset by a deterioration during the second half in Automotive, Electronics and Value Added Resellers, although these end markets are gradually stabilising," said Chief Executive Jakob Sigurdsson.
Victrex recorded a 15% drop in group sales to 3,751 tonnes from 4,407 tonnes the year before. The company explained: "This reflects the cyclicality in Automotive and the associated impact on our Value Added Resellers segment, together with some de-stocking, with supply chain inventories running very low."
The company also noted the "weaker" Electronics market, with both the semiconductor and smartphone markets down. Victrex said a further headwind was the "tough" year on year comparative in its Consumer Electronics business, where it signed a large contract in the prior year. Excluding that contract, total group sales are down 12%.
Sales in the fourth quarter were down 5% on the year before, but improved on the third quarter, which Victrex points to a "degree of stabilisation" in its Automotive and Electronics end markets.
Sigurdsson continued: "Pleasingly, we saw further progress in our new product pipeline and mega-programmes. We secured our first commercial order for Aerospace composite parts, we signed a new long-term development alliance with Airbus to support larger Primary and Secondary structures, and we saw strong growth in our next generation PEEK-OPTIMA HA Enhanced product for the Spine market. In PEEK Gears, our value proposition is strong and we have multiple development programmes underway, as well as gears on the road."
Victrex said it remains "cautious" in its near term outlook.
"Looking forward, Automotive and Electronics are showing signs of stability, although we will retain some caution on these markets at this early stage, with an initial assumption that current trends will continue through the first half year," Sigurdsson said.
He added: "Our cost-effective de-bottlenecking project is underway, enabling Victrex to gain significant incremental capacity in support of our medium-term growth programmes, although an extended shutdown will mean some under recovered overheads. On a full year basis, currency offers a modest tailwind although this will be offset to a large degree by some limited incremental operating investment, cost inflation and our employee bonus scheme. Overall, we remain focused on making year-on-year progress and our Polymer & Parts strategy keeps us well placed to deliver our medium to long term growth opportunities."
Shares in Victrex were 1.2% lower in London on Thursday morning at 2,312.00 pence.
By Paul McGowan; [email protected]
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