Morgan Advanced Materials backs annual guidance as H1 profit rises

Morgan Advanced Materials reported a rise in half-year profit and revenue on Thursday as it reaffirmed expectations for the full year.

In the six months to the end of June, pre-tax profit rose to £54.7m from £52.4m on revenue of £525.8m, up 2.2% or 1% on an organic constant currency basis.

The interim dividend was held flat at 4p a share and group headline operating profit margin came in at 12.8% versus 12.1% in the same half a year ago.

Chief executive officer Peter Raby said organic revenue growth of 1% was delivered under "more challenging end market conditions".

"The group has made good progress during the first half of the year. We are on track with the implementation of our strategy, improving our sales capability, driving new product development and improving operational performance," he said.

"Looking forward into the second half of 2019 there are a number of global headwinds and uncertainties leading to a slowing of industrial markets. Based on our current assessment of business trends and orders, we expect group revenues to be broadly flat in the second half compared to the prior year. Our expectations of profitability for the full year remain unchanged."

At 0940 BST, the shares were up 1.9% at 262.60p.

Broker Peel Hunt said the standout from the results is the improvement in margins to 12.8% despite organic revenue growth of just 1%. "This really demonstrates that a new, stronger Morgan is emerging," it said.

"The company is trading in line with expectations and therefore forecasts remain unchanged. This leaves Morgan trading on a multiple of just 9.5x, which does not even begin to adequately reflect the potential of the business."