Victrex made a solid start to 2017, with a strong performance in the core business compared to a weak Q1 2016. Q1 2017 sales volumes in the core business (excluding Consumer Electronics) were 25% ahead of the prior year quarter, reflecting growth across Automotive, Aerospace, Energy & Industrial and Value Adding Resellers. Electronics, outside of the large Consumer Electronics order, also saw growth. Q1 2017 performance was offset by Medical, which was behind last year, principally due to phasing.
Overall, Q1 2017 Group revenue of £55.7m was broadly in line with the prior year (Q1 2016: £56.0m), with Q1 2017 Group volumes of 810 tonnes down 6% (Q1 2016: 860 tonnes). Q1 2017 performance reflected, as expected, the very limited volumes from the large Consumer Electronics order, compared to much stronger volumes in the prior year.
Victrex retains a highly cash generative business model, with no significant changes to its financial position since 30 September 2016.
Joint-venture to accelerate Aerospace Loaded Brackets mega-programme
Victrex is also announcing today that it is investing to help accelerate its Aerospace Loaded Brackets mega-programme, via a joint-venture with Tri-Mack Plastics, a proven partner for manufacturing semi-finished and finished parts within Aerospace.
The joint-venture, TxV Aerospace Composites, will focus on developing a new supply chain, with the capability to manufacture, at scale, unique and differentiated Loaded Brackets, blending new PEEK and PAEK polymer grades and composite materials. Victrex will have the majority share of the JV and total capital expenditure from Victrex is anticipated to be around £10m, spread over the next three years.
The Aerospace Loaded Brackets programme will utilise a differentiated and protectable solution, with an “over-moulded” bracket offering up to 60% weight saving compared to metals, as well as quicker manufacturing. This solution has multiple application opportunities, particularly within aircraft interiors. Following pre-qualification of this semi-finished product with major customers and initial prototype revenue during 2016, a new manufacturing facility in the US will offer the potential to capture significant growth opportunities. Industry projections suggest thermoplastic composites in Aerospace could increase to over 5000 tonnes by 2025-30, compared to the current 2000 tonnes (source: Composites World).
David Hummel, Chief Executive of Victrex, said: “This is an exciting acceleration opportunity which builds on our Kleiss and Magma investments and is in line with the Group's strategy to move further downstream into selected and differentiated semi-finished products.
“We will continue to pursue acceleration options across several of our mega-programmes, whether organically, through partnership or acquisition. Further strengthening and accelerating our growth pipeline remains a key priority for Victrex.”