REG - Victrex PLC - AGM & Q1 Interim Management Statement

VictrexAnnouncement

09/02/2024 07:00

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RNS Number : 5635C  Victrex PLC  09 February 2024

 

9 February 2024

Victrex plc - AGM & Q1 Interim Management Statement

'A soft start to FY 2024 - in line with guidance'

Victrex plc is an innovative world leader in high performance polymer
solutions, delivering sustainable products which enable environmental and
societal benefit in multiple end-markets. Today's Interim Management Statement
(IMS) covers the first quarter of FY 2024, from 1 October 2023 to 31 December
2023.

 

At the Group's FY 2023 preliminary results in December 2023, our outlook for
the year ahead indicated that we were seeing a slow start to FY 2024. This has
been driven by a continuation of the weakness seen in H2 2023 across several
end-markets, in line with the wider Chemical sector. Although we typically see
seasonally lower volumes in Q1, this period has remained challenging, compared
to a good performance in the prior year period.

Summary

·      Q1 Group revenue down 22% at £61.2m (Q1 2023: £78.8m)

·      Q1 Group volume down 21% at 751 tonnes (Q1 2023: 948 tonnes)

·      Robust Group ASP, in line with guidance at £82/kg; sales mix
reflects a softer quarter in Medical due to order phasing and destocking, and
adverse currency movements

·      Improvement seen in January (the start of Q2), though visibility
remains limited

 

End market performance

In our Sustainable Solutions area, the Group saw further progress in
Aerospace, whilst Automotive returned to growth and continues to track
positively. Q1 performance was offset by the prolonged downturn in the
end-markets of Electronics, Energy & Industrial and Value Added Resellers
(VAR). At the start of Q2, January trading saw a slight improvement, compared
to Q1 run-rates and the prior year (January 2023), though we note that
visibility is limited.

 

After a softer start in Medical, Q2 has begun positively, compared to both Q1
and the prior year. However, we are mindful of some destocking amongst medical
device companies, which has impacted the industry over recent months. We
expect to see improvement as the year progresses and remain encouraged by the
broader range of Medical applications using PEEK. In our Medical
mega-programmes, we are seeing commercial revenues building in Trauma plates,
whilst our PEEK Knee development is ahead of our expectations. Following
strong progress in the clinical trial, the focus for PEEK Knee is now on the
regulatory and commercial pathway, and additional major OEM collaborations.

 

Financial position & cost actions

Victrex retains a cash generative business model, supporting growth investment
and shareholder returns. With interest payable for our China loan - as our
manufacturing facilities in China prepare for commercial operations - and
reflecting the Group's lower cash balance, net interest will be negative this
year.

 

Cash and working capital management remain key priorities. Together with lower
capital expenditure, our planned inventory unwind will improve our cash
position, although this is currently being held back by the weak trading
environment. This one-off impact of lower asset utilisation, as we unwind
inventory in FY 2024 and the remainder in FY 2025, will further increase
under-recovered fixed costs in our income statement.

 

The Group's cost actions remain strong in this challenging period. Pleasingly,
operating overheads are tracking lower than the prior year at this early
stage, despite continued innovation investment. Additional cost options are
available if the current macro-economic environment persists for a longer
timescale.

 

Outlook

Jakob Sigurdsson, Chief Executive of Victrex, said: "After a soft start to the
year, in line with the wider Chemical sector, the Group is seeing signs of
monthly run-rate improvement, on a sequential basis (Q2 vs Q1).

 

"January trading was solid and ended slightly ahead of the prior year
comparative. However, we are mindful of the soft start and limited visibility
of an uptick in several end-markets. Together with the increased year-on-year
impact in our income statement from reduced asset utilisation, this means
first half revenue and PBT is expected to be lower than the prior year period.
The Group previously communicated that progress in revenue and PBT for FY 2024
was reliant on a macro-economic recovery in our second half. The opportunity
to deliver year-on-year progress remains. However, a continuation of the
current macro-economic conditions makes achieving a profit growth outcome for
the year more challenging and requires a further step up in run rates for the
remainder of FY 2024. We continue to tightly manage controllable expenses, to
support our performance.

 

"Victrex's long-term investment proposition remains strong. We have a robust
and diversified core business, increasing commercialisation in our
mega-programmes, well invested assets, and the opportunity for cashflow
improvement. Overall, we are well-placed for a macro-economic recovery and for
the medium to longer term."

 

 

Annual General Meeting

Victrex's Annual General Meeting will also be held today, starting at 11.00am
GMT and taking place at JP Morgan, 1 John Carpenter Street, London EC4Y 0JP.

 

Victrex plc:

  Andrew Hanson, Director of Investor Relations, Corporate Communications   +44 (0) 7809 595831
 & ESG
  Ian Melling, Chief Financial Officer                                      +44 (0) 1253 897700
  Jakob Sigurdsson, Chief Executive                                         +44 (0) 1253 897700

 

About Victrex:

Victrex is an innovative world leader in high performance polymer solutions,
focused on the strategic markets of Automotive, Aerospace, Energy &
Industrial, Electronics and Medical. Every day, millions of people rely on
products or applications which contain our sustainable materials, from
smartphones, aeroplanes and cars to energy operations and medical devices.
With over 40 years' experience, we are moving beyond the polymer into
semi-finished and finished products which shape future performance for our
customers and our markets, enable environmental and societal benefit for our
customers and drive value for our shareholders. Find out more at
www.victrexplc.com (http://www.victrexplc.com)

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