Victrex maintains dividend as revenue, profits narrow

Polymer specialist Victrex reported a 24% decrease in group sales volumes in its preliminary results on Tuesday, to 3,598 tonnes.

The FTSE 250 company said group revenue fell 10% year-on-year to £307m for the 12 months ended 30 September, although its average selling price per kilogram increased 18% to £85.3 per kilogram.

Gross profit stood at £162.6m, down 7%, but the gross margin improved to 53%, reflecting a gain of 180 basis points.

The underlying profit before tax for Victrex reached £80m, a 16% reduction from the prior year.

Reported profit before tax narrowed by 17% to £72.5m, while underlying earnings per share were down 18% at 77.7p, and earnings per share were 19% smaller at 70.9p.

The dividend per share remained unchanged at 59.56p.

On the operational front, Victrex reported significant weakness in the electronics, energy and industrial, and VAR sectors, while the medical segment achieved record revenues with a 12% increase.

The aerospace sector also performed strongly.

Victrex said it maintained robust cost discipline while prioritising investment in medical and innovation.

The firm reported strong average selling prices, primarily driven by price increases and factors like product mix and foreign exchange rates.

That, the board said, led to an improved gross margin despite lower asset utilisation.

Victrex said it was strategically positioned for future growth, with targets of 5% to 7% compound annual revenue growth based on core and new applications.

There was potential for even higher growth of 8% to 10% through the commercialisation of mega-programmes, targeting revenues of £25m to £35m from the portfolio by the 2025 financial year.

The company said it had also submitted its decarbonisation targets to the Science-Based Targets Initiative (SBTi).

Investment was prioritised in a streamlined portfolio, focusing on aerospace, e-mobility, knee, magma and trauma.

Key milestones were achieved in those areas, with the board reporting successes in e-mobility, trauma plates, knee, aerospace, and magma.

Victrex said it maintained a strong balance sheet and anticipated opportunities for cash flow improvement.

Despite available cash decreasing to £30.1m by the end of the year, it said its well-invested assets included new facilities in China and upgraded facilities in the UK.

Inventory levels were also expected to unwind starting in the 2024 financial period.

The final dividend was maintained at 46.14p per share.

“After one of the most challenging years for the chemical sector and for Victrex, the group delivered in line with guidance,” said chief executive officer Jakob Sigurdsson.

“Strong average selling prices, continued innovation, cost discipline and well invested assets demonstrate the strength of our polymer and parts strategy and business model.

“Record revenues in medical - with a new goal for medical to double in five years and contribute around one-third of revenues in less than 10 years - and growing opportunities in China, with our new facilities ready to start up, underpin our belief in the core and our mega-programmes.”

At 0850 GMT, shares in Victrex were down 4.42% at 1,385p.

Reporting by Josh White for Sharecast.com.