22nd Jul 2015 11:28
LONDON (Alliance News) - Carbon and ceramic products manufacturer Morgan Advanced Materials PLC on Wednesday said its pretax profit increased in the first half of 2015 on the back of improved revenue and margins in the half, sending its shares higher.
FTSE 250-listed Morgan Advanced, which makes products ranging from fire protection materials to ultrasonic sensors and foundry products, said its pretax profit for the half was GBP49.2 million, up from GBP37.5 million a year earlier.
Revenue increased to GBP469.2 million from GBP448.4 million, and the group's profit was further boosted by an improvement in its earnings before interest, taxation and amortisation margin, up to 13% from 12.6% a year earlier, and by a beneficial foreign exchange translation effect.
In constant currencies, revenue for the group was up 3.1%, compared to the 4.6% rise it showed on a reported basis.
The company said it will edge up its interim dividend to 4.0 pence per share from 3.9 pence a year earlier.
"The group has performed well through the period with improvement across all our business performance measures. Our focus in the last six months has been on driving positive mix shift, delivering cost and operational efficiencies and making continued investments in technology and differentiation," said Chief Executive Kevin Dangerfield.
"The group's solid financial and operational platform and the investment in the business gives the board confidence in the prospects for the group as we enter the second half of 2015," Dangerfield added.
Shares in Morgan Advanced are up 2.8% to 341.30 pence, the third best performer in the FTSE 250.
Morgan Advanced said its order intake in the first half was solid, with its book-to-bill ratio at 1.03-times and all three of its operating regions above 1-times. It said its order book is up 5.7% at the end of June from a year earlier.
In North America, revenue for the group was up 12% to GBP191.6 million, with continued growth in its thermal ceramics and electrical carbon businesses, which was partially offset by flat trading in technical ceramics and a small decline for the seals and bearings business. Certech, which was hit by operational and yield issues in 2014, continued to improve.
European revenue was marginally lower in the half, down to GBP157.2 million from GBP159.4 million, as its thermal ceramics business performed well but its technical ceramics business saw some market softness. The thermal ceramics performance, however, was the main contributor to a 110 basis point improvement in the European division's earnings before interest, taxation and amortisation margin.
Asia and Rest of World operations for Morgan Advanced posted a 2.6% increase in revenue in the half, despite a slowdown in China and soft demand in South America. All other major regions in Asia grew well in the half, however, particularly South Korea and South East Asia.
Investment bank Investec said both revenue and margins for Morgan Advanced came in ahead of its expectations, with progress made despite the weakness in China and South America, though the broker sees these conditions continuing into the second half of the year.
Investec cut its target price on Morgan Advanced to 360 pence from 380p as it sees the positive currency translation effect, which burnished earnings in the first half, turning negative in the second, but keeps a Buy on the company as it still thinks it looks good value.
By Sam Unsted; [email protected]; @SamUAtAlliance
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