6 July 2023
Victrex plc – Q3 Interim Management Statement
Volumes lower on macro-economic weakness; further price improvement
Victrex plc is an innovative world leader in high performance polymer solutions, delivering sustainable products which support CO2 reduction and bring environmental and societal benefit in multiple end-markets. Today’s Interim Management Statement for Q3 covers the period 1 April 2023 to 30 June 2023.
Performance summary – Q3 in line with guidance
As previously communicated in our trading update of 14 June 2023 and at our interim results, compared to a record prior year period, the Group is seeing ongoing macro-economic weakness and destocking across several end markets.
The Group continues to be well positioned for a macro-economic recovery.
Q3 saw further improvement in average selling prices (ASP), taking year-to-date ASP to £85/kg, supported by price increases, sales mix and currency. We now anticipate that full year ASP will be above £84/kg. This in turn, together with easing energy costs, means we are seeing gross margin improvement during the second half, compared to the prior year, but it will be slightly held back by lower asset utilisation.
Further progress in mega-programmes; E-mobility exceeding expectations
Further progress was seen in commercial milestones within our ‘mega-programme’ growth pipeline, particularly in E-mobility and Trauma. We now anticipate annual revenues in our E-mobility mega-programme will exceed our original expectations, reaching £5m in FY 2023. In Trauma, we are making good progress with our PEEK composite Trauma plates, serving growing demand in the US and Asia. Run-rates are building towards £1m revenue and further growth in both E-mobility and Trauma is expected in FY 2024.
Q3 performance:
· Q3 Group revenue down 23% to £72.2m (Q3 2022: £93.4m)
· Q3 Group volume down 38% to 818 tonnes (Q3 2022: 1,323 tonnes)
· Year to date Group revenue of £234.4m is 8% down on the prior year (2022 YTD: £253.5m), with YTD Group volume of 2,759 tonnes being 23% down on the prior year (2022 YTD: 3,586 tonnes)
· Q3 weakness driven by Electronics, Energy & Industrial and Value Added Resellers
· Aerospace seeing good growth; Automotive stable YTD
· Medical performing strongly; YTD revenue continues to track up double-digit
Financial position
Victrex retains a highly cash generative business model, which supports growth investment and shareholder returns. Capital expenditure this year is focused on our China manufacturing investments, with our new PEEK polymer facility having delivered first polymer ahead of commercial start up by the end of 2023. Total cash on 30 June 2023 was £27m, which includes £3.5m cash ringfenced in China investments. Capital expenditure will start to step down from FY 2024, supporting improving cashflows.
Outlook unchanged
Jakob Sigurdsson, Chief Executive of Victrex, said: “In line with our recent trading update, we continue to be impacted by ongoing macro-economic weakness and destocking in several end markets. Compared to a record prior year period, lower Q3 volumes were driven by Electronics, Energy & Industrial and Value Added Resellers. Aerospace and Medical continue to perform strongly, whilst Automotive is stable year-to-date.
“Overall, our Outlook is unchanged from what we recently communicated, with full-year adjusted (pre-exceptional) PBT expected to be in the range of £80m-£85m. As we move into the final quarter, strong average selling prices, mix, energy costs and cost discipline remain supportive, and we continue to be well-placed for when the macro-economic environment improves.
“On a medium to long term basis, we have a strong and diverse core business, growing commercialisation in our mega-programmes, capital investment which is set to reduce and support improving cash flows, and strong ESG credentials.”
Victrex will report its Preliminary Results for 2023 on Tuesday 4 December 2023.
Analyst & investor call:
A call for analysts & investors will be held today, Thursday 6 July, at 08.30am UK time. To register for the call please follow this link:
Enquiries:
Victrex plc:
| Andrew Hanson, Director of Investor Relations, Corporate Communications & ESG | +44 (0) 7809 595831 |
| Jakob Sigurdsson, Chief Executive | +44 (0) 1253 897700 |
| Ian Melling, Chief Financial Officer | +44 (0) 1253 897700 |