Victrex sees H1 profits drop, expects H2 improvement

High-performance polymers group Victrex said underlying profits dropped by a third in the first half after an 11% drop in volumes, though results did see a sequential improvement in the second quarter.

The company said interim numbers were in line with guidance as it projected further growth in the second half, compared to the first half and the second half of 2023.

Group sales volumes totalled 1,737 tonnes in the six months to 31 March, down from 1,941 tonnes the year before, with medical revenues 19% lower due to industry destocking.

The decline, along with a 4% fall in average selling prices, led to a 14% decrease in group revenues to £139.3m.

However, second-quarter volumes rose 31% compared with the first quarter, and were broadly flat against last year.

Despite a 13% fall in operating expenses, underlying profit before tax (PBT) was £28m, down 34% on the year before, held back by Medical trading, higher cost inventory and lower asset utilisation.

"Recent improvement in some end-markets underpins our focus on volume, revenue and profit growth during the second half, compared to H1 and also versus H2 2023," said chief executive Jakob Sigurdsson.

"A continuation of current monthly run-rates - based on the H1 exit rate and Medical improvement - would support a slightly better PBT performance in H2 2024, compared to H2 2023. Further improvement, beyond these levels, relies on a faster rebound from recent Medical headwinds."

As previously indicated, Victrex doesn't expect to return to PBT growth for the year as a whole, but said that growth prospects for next year "look encouraging" if recent end-market improvements continue.

"We have confidence in our mid-to-long-term opportunities, with a diversified core business, increasing commercialisation in our mega-programmes, well invested assets, enhanced capability in our global team and the opportunity for cashflow improvement," Sigurdsson said.