12th Feb 2015 11:15
LONDON (Alliance News) - Morgan Advanced Materials PLC on Thursday said its pretax profit halved in 2014, dragged back by currency headwinds, but shares in the company rose as it said its revenue and margins improved in the second half.
The FTSE 250-listed carbon and ceramic products manufacturer said its pretax profit for the year to December 31 was down to GBP31.5 million from GBP64 million a year earlier. The profit was dragged down by restructuring and impairments costs primarily, with total exceptional costs rising to GBP46.4 million this year from GBP11.1 million a year earlier.
But the group said its underlying operating profit - being its earnings before interest, taxation and amortisation before restructuring charges - rose to GBP112.4 million, against GBP108.5 million last year. Its underlying profit margin for the year was 12.2%, compared to 11.3% for last year. Its EBITA margin for the full-year was 12.8%, improved against the 12.4% from last year and boosted by the 13% margin reported in the second half.
Shares in Morgan were up 2.8% to 310.55 pence on Thursday, one of the best performers in the FTSE 250.
Revenue was down to GBP921.7 million from GBP957.8 million in the year, but the group said its revenue rose 1.8% at constant currencies. Revenue in the second half of the year rose by 3.8% against the first half on an organic and constant currency basis, it said.
The company has proposed a final dividend of 7.0 pence per share, up on the 6.7 pence paid last year, bringing its total dividend for 2014 to 10.9 pence per share from 10.5 pence a year earlier.
Morgan said its revenue in North America was down 1.9% in the year to GBP353.1 million, but this again rose 3.6% on a constant currency basis and revenue in the second half was up 2.9% against the first in constant currencies.
Its Technical Ceramics arm was weaker in 2014 year-on-year, hit by a fall in revenue from the Certech ceramic cores business, which was also impacted by operational and yield issues over the year. The Thermal Ceramics, Electrical Carbon and Seals and Bearings businesses all performed well, with improved revenue and margin performance in the year.
In Europe, Morgan's revenue dropped 8.8% to GBP325.7 million, a fall only partially driven by currency headwinds, as constant currency revenue fell 5.5%. The main contributor to the fall was its Composite & Defence Systems business, on which the company booked a GBP26.9 million goodwill charge owing to the significant decline in business from the UK Ministry of Defence compared to previous years.
Excluding the C&DS business, like-for-like revenue in the European business was flat overall and Morgan said the order intake is marginally positive going into 2015.
Revenue in its Asia & Rest of World business rose 1% to GBP242.9 million, again held back by currency translation, with revenue growth at 13% in constant currencies. Morgan said its performance across the region was stronger year-on-year, with growth in China, India, Korea and the Middle East.
In addition to the goodwill charge taken on the C&DS business in Europe, the company also booked GBP16.3 million in restructuring cost related to the consolidation of its carbon material manufacturing operations.
"Against the back drop of continuing mixed market conditions as we enter 2015, Morgan will continue to focus and invest in its key technology areas to drive differentiation, positive mix shift and sustainable growth potential. This investment in the business combined with a positive order book as we start 2015 gives the Board confidence that the Group can make further progress in 2015," said Morgan Interim Chief Executive Officer Kevin Dangerfield.
Morgan in January said it has hired Pete Raby to take over as its new chief executive. He joins the company from his position as the president of the communications and connectivity division of FTSE 250-listed engineering company Cobham PLC.
In December, the company briefly become the subject of takeover interest from fellow FTSE 250-listed engineering group Vesuvius PLC, but the latter pulled out after a preliminary proposal it made to Morgan's board was rejected. Morgan Advanced said the approach was a "nil premium proposal" that fundamentally undervalued its existing business and its prospects.
Investec hiked its price target on the stock to 360 pence from 350 pence and reiterated its Buy rating, saying Morgan improved over the course of 2014.
It said the company has exited its long-term underperforming businesses and noted evidence of underlying growth elsewhere in the business.
By Sam Unsted; [email protected]; @SamUAtAlliance
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