Morgan Advanced Materials lowers outlook, launches £40m buyback

Morgan Advanced Materials reported a 3.8% rise in organic sales for the first nine months of 2024 on Tuesday, driven primarily by strong demand in its performance carbon segment, which saw a 12.6% increase.

However, challenging market conditions led the FTSE 250 company to downgrade its full-year growth forecast to around 3%, with adjusted operating profit margins expected at 11.4% amid foreign exchange pressures.

To navigate the tougher market environment, Morgan said it had expanded its simplification programme, first announced in March.

The restructuring effort, initially targeting £10m in annual savings, had now been increased to achieve an additional £12m in savings through further cost reductions in supply chain and back-office operations.

It said the total anticipated cost of the programme had risen to £45m, with expected cumulative savings reaching £22m by mid-2026.

Additionally, Morgan launched a £40m share buyback programme, aligned with its capital allocation strategy, complementing its progressive dividend policy and significant organic investments, including £100m to expand semiconductor manufacturing capacity.

Although the company said it remained open to acquisitions, the timing of potential deals had made the buyback a priority for returning surplus capital to shareholders.

“We are seeing a weaker trading environment in the near term and are expanding our simplification programme, continuing our track record of self-help,” said chief executive officer Pete Raby.

“We remain focused on delivering enhanced returns to shareholders and are pleased to be able to support this in the near term with the additional cost savings and share buy-back programme, both announced today.

“Our business is well positioned with leading market positions, a strong balance sheet, and attractive opportunities in both faster growth and core markets as markets recover.”

At 0900 GMT, shares in Morgan Advanced Materials were down 2.46% at 237.5p.

Reporting by Josh White for Sharecast.com.