6 December 2022
Victrex plc – Preliminary Results 2022
‘Record revenue & volume; solid underlying PBT growth, despite cost headwinds & currency’
Victrex plc is an innovative world leader in high performance polymer solutions, delivering sustainable products which enable environmental and societal benefit. This announcement covers preliminary (audited) results for the 12 months ended 30 September 2022.
| FY 2022 | FY 2021 | % change (reported) | % change(constant currency)1 | |
| Group sales volume | 4,727 tonnes | 4,373 tonnes | +8% | N/A |
| Group revenue | £341.0m | £306.3m | +11% | +10% |
| Gross profit | £174.5m | £165.3m | +6% | +10% |
| Gross margin | 51.2% | 54.0% | -280bps | N/A |
| Underlying PBT1 | £95.6m | £91.7m | +4% | +12% |
| Reported PBT | £87.7m | £92.5m | -5% | +2% |
| Underlying EPS1 | 95.0p | 83.4p | +14% | N/A |
| EPS | 87.6p | 84.3p | +4% | N/A |
| Dividend per share (regular & special dividends) | 59.56p | 109.56p | -46% | N/A |
Highlights:
• Strong core growth; revenue up 11%, volume up 8% & better pricing
– Double-digit growth in Electronics, Energy & Industrial, Value Added Resellers (VAR)
– Aerospace improving; Semiconductor challenges impacting Automotive
– Continued progress in Medical, revenue +14%
– Improved pricing in H2 (H2 2022 ASP up 4% vs H1 & FY 2022 ASP up 3%)
• Solid underlying PBT growth, up 4% & 12% in constant currency, offset by cost inflation
– Underlying profit before tax (PBT) up 4% at £95.6m & up 12% in constant currency
– Reported PBT £87.7m, reflecting year 1 ERP investment (exceptional items of £7.9m)
– Gross profit up 6% to £174.5m, despite significantly higher cost of manufacture
– Gross margin impacted by lag in inflation recovery & currency, despite efficiency gains
– Continuing action to mitigate inflation
• Strong progress in ‘mega-programme’ growth pipeline
– Medical:
· PEEK Knee clinical trial well progressed, 30 implants & 12 patients >12 months
· New development relationship with top 5 Knee company Aesculap
· First implants for In2Bones Trauma plates based on VictrexTM PEEK
– Industrial:
· New business wins in E-mobility
· 1st prototype parts in Aerospace Structures; potential for 10-fold PEEK content increase
· Continuing support to TechnipFMC for Magma, with new scale-up facility in Brazil
• Further progress on ESG: enabling environmental & societal benefit
– 100% renewable electricity at all UK sites
– Initial Scope 3 emissions assessment completed, with opportunities identified
– Sustainable products represent 48% of Group revenues1
• Solid cash generation underpins growth investment & returns
– FY 2022 available cash1 of £66.0m*, post-payment of FY 2021 special dividend
– Commissioning underway for new PEEK facility in China
– Final dividend of 46.14p/share, total FY 2022 dividends 59.56p/share
1 Alternative performance measures and other internal metrics are defined below
*excludes £2.8m of cash ring-fenced in the Group’s Chinese subsidiaries and includes £10.1m in 95-day notice deposit accounts
Commenting on the Group’s results, Jakob Sigurdsson, Chief Executive of Victrex, said :
“This was a record year for revenue and volume. We delivered good progress across the majority of our end-markets, new application growth and improved pricing, as we continue to recover cost inflation. It was also pleasing to see double-digit growth in Medical. We are prioritising investment in this business, with the intention of Medical contributing over one-third of Group revenues in the longer term.
Underlying PBT up 4% and 12% in constant currency, offset by lag in inflation recovery
“Victrex continues to face unprecedented energy and raw material inflation, which we will help mitigate through price and efficiency. Despite this, the Group delivered solid growth in underlying PBT, which was up 4% and 12% in constant currency. Higher year-on-year production also helped improve operating efficiency.
Increasing commercialisation in mega-programme portfolio
“Looking towards our future growth, we made strong progress in our mega-programmes. Thirty patients are now implanted with a PEEK Knee as part of the clinical trial, including twelve post-12 months. We will also now be working with Aesculap, a top 5 Knee company, in a collaboration which offers significant potential. In Trauma, In2Bones saw patient surgeries using our PEEK composite trauma plates. We also gained new E-mobility business and saw the first sizeable structural parts exhibited by Airbus as part of the Aerospace Structures programme. These offer the potential for a 10-fold increase in PEEK content for future aircraft.
Sustainable products enabling environmental & societal benefit for customers and the planet
“Victrex is closely aligned to future megatrends and ESG is at the heart of our business model. Our sustainable products represent 48% of revenues and enable environmental & societal benefits by supporting CO2 reduction, energy efficiency and improved patient outcomes.
Strong financial position
“With a strong financial position, we can support growth investment, which is our priority, as well as attractive shareholder returns. As part of these results, we will engage with shareholders on a proposed update to our capital allocation framework, specifically share buybacks and special dividends.
Outlook
“Several end-markets are yet to fully recover from the effects of the pandemic and we continue to see good growth opportunities across the Group. However, we are mindful of the uncertain macro-economic outlook for 2023 and some signs that VAR volumes are edging down slightly, to more normalised levels. This means the opportunity to improve on last year’s record Group volume is likely to be challenging. We also face further and significant year-on-year energy and raw material inflation, although additional pricing actions are in progress, with a timing lag.
“Overall, we have seen a steady start to the year and are focused on modest revenue and profit growth. This includes the benefit from pricing, an improved sales mix and currency tailwinds. We will also see further investment in our long-term growth programmes, as they progress towards greater commercialisation.”
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 use products and applications which contain our sustainable materials – from smartphones, aeroplanes and cars to energy production and medical devices. With over 40 years’ experience, we develop world leading solutions in PEEK and PAEK based polymers, semi-finished and finished parts which shape future performance for our customers and our markets, enable environmental and societal benefits, and drive value for our shareholders. Find out more at www.victrexplc.com
A presentation for investors and analysts will be held at 9. 00am (GMT) this morning at JP Morgan, 1 John Carpenter Street, London EC4Y 0JP. A conference call facility is available, to register, please follow the link: https://cossprereg.btci.com/prereg/key.process?key=P4CX3XD7P
The presentation will be available to download from 8.30am (GMT) today on Victrex’s website at www.victrexplc.com under the Investors/Reports & Presentations section.
Victrex plc:
Andrew Hanson, Director of Investor Relations, Corporate Communications & ESG +44 (0) 7809 595831
Ian Melling, Chief Financial Officer +44 (0) 1253 897700
Jakob Sigurdsson, Chief Executive +44 (0) 1253 897700