REG - Morgan Adv.Materials - Trading Update

Morgan Advanced MaterialsAnnouncement

05/11/2024 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241105:nRSE8969Ka&default-theme=true

RNS Number : 8969K  Morgan Advanced Materials PLC  05 November 2024

Press Release

Morgan Advanced Materials plc

5 November 2024

Trading Update

Expanded simplification programme, and

Commencement of a £40m share buy-back programme

Morgan Advanced Materials plc, the global manufacturer of advanced carbon and
ceramic materials for technically demanding applications, announces today a
trading update for the first nine months to 30 September 2024 with an outlook
for the current financial year, an expanded simplification programme and the
commencement of a share buy-back programme of up to £40m.

Current Trading

Sales for the first nine months of the year to 30 September 2024 were 3.8%
higher for the Group on an organic constant currency basis, compared to the
same period last year.  By reporting segment, organic constant-currency sales
performance for the nine months to September 2024, was as follows:

 

Thermal Products                            -2.3%

Performance Carbon                      +12.6%

Technical Ceramics                          +3.4%

2024 Outlook

Market conditions have weakened during the second half and we are now seeing a
further deterioration in our outlook for the fourth quarter.  Our outlook for
constant currency revenue growth for the full financial year is now around
3%.  Together with additional FX headwinds, we now expect an adjusted
operating profit margin for the year of c.11.4%.

Expansion of Simplification Programme

Our simplification programme, announced in March 2024, included restructuring
that was expected to deliver £10 million of annualised savings by 2025 with
an expected implementation cost of around £20m incurred over 2023 to 2025.
Our increased focus on simplification has now allowed us to expand this
programme in order to achieve further cost reductions in our supply chain and
back office, and in order to help us return adjusted operating profit margin
to our target range in 2025.  We expect to deliver an additional £12m of
annualised savings with an associated exceptional charge of around £25m
incurred over 2024 to mid-2026 (resulting in expected overall programme
savings of £22m with an exceptional charge of £45m).

Our expected overall investment in both simplification and growth remains
unchanged, as we allocate capital to the near term cost opportunity in weaker
markets in preference to capacity investment in core industrial markets.

Expected returns from our previously announced investment in Faster Growing
Markets also remains unchanged.

Announcement of a Share Buy-back Programme

The Group is pleased to announce the commencement of a share buy-back
programme of up to £40m.   The programme reflects the Group's strong
prospects and balance sheet, which have allowed us to increase returns to
shareholders by supplementing our regular dividend with the launch of this
share buy-back programme.

Whilst we continue to pursue acquisition targets in line with our strict
criteria, we expect that the timing of any likely transaction is such that a
share buy-back programme can now be prioritised, in line with our capital
allocation policy.  The Group continues to target through the cycle leverage
range of 1.0x to 1.5x net debt to adjusted EBITDA excluding M&A, and
expects to remain within this range during 2025.

Further detail is provided in a separate RNS released today.

Pete Raby, Chief Executive Officer, said:

"We are seeing a weaker trading environment in the near term and are expanding
our simplification programme, continuing our track record of self-help.  We
remain focused on delivering enhanced returns to shareholders and are pleased
to be able to support this in the near term with the additional cost savings
and share buy-back programme, both announced today. Our business is well
positioned with leading market positions, a strong balance sheet, and
attractive opportunities in both faster growth and core markets as markets
recover."

 

For further enquiries:

 Pete Raby, CEO                   Morgan Advanced Materials plc                                01753 837000

 Richard Armitage, CFO

 Nina Coad                        Brunswick                                                    0207 404 5959

 

This announcement contains inside information.  The person responsible for
arranging the release of this announcement on behalf of Morgan Advanced
Materials plc is Richard Armitage, Chief Financial Officer. The Company's LEI
number is I4K14LL95N2PHDL7EG85.

Notes to editors

1.      Simplification Programme

 £ million                                        FY 2023  FY 2024  FY 2025  FY 2026  FY 2027  Total
 Announced March 2024
 Adjusted operating profit benefit (incremental)  1        7        10
 Costs charged to specific adjusting items        (7)      (11)     (2)                        (20)
 Announced November 2024
 Adjusted operating profit benefit (incremental)                    6        12       12
 Costs charged to specific adjusting items                 (5)      (15)     (5)               (25)

 

2.      Our financial framework

As previously announced, our financial framework is:

-        Organic constant currency revenue growth of 4% - 7% through
the cycle.

-        Adjusted operating profit margin of 12.5% to 15.0%

-        Return on invested capital of 17.0% to 20.0%

-        Leverage (net debt/EBITDA excl. leasing) of 1.0x to 1.5x
without M&A, 1.5x to 2.0x with M&A

 

3.      This announcement contains forward-looking statements. These
statements have been made in good faith based on the information available up
to the time of the approval of this announcement. No assurance can be given
that these expectations will prove to have been correct. By their nature,
forward-looking statements involve risks, uncertainties or assumptions that
could cause actual results to differ materially from those expressed or
implied by these forward-looking statements. As such, undue reliance should
not be placed on forward-looking statements..

The Directors undertake no obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTFFFIILALSIIS