Victrex posts steady growth, tempts investors with special dividend promise

Victrex has seen steady growth for the year with a 4% rise in revenue, as it tempts investors in with by promising special dividends.

However, there was no repeat of last year's extraordinary payout, with management stating that the lagged impact of the oil price fall on oil and gas markets had offset growth in the rest of the segments of its Polymer Solutions unit.

"We expect a muted/negative share price reaction given the lack of a special dividend in 2015," Credit Suisse analyst Mathew Waugh said in a research note sent to clients.

The FTSE 250 polymer and bio-materials solutions company announced its preliminary results for the year to 30 September on Tuesday.

Revenue rose from £252.6m in 2014 to £263.5m, driven by a strong performance in the first half of the year but relatively flat sales in the second half, even though the latter were in-line with estimates from Credit Suisse at £133.2m.

Due to the impact of currency conversion, lower sales in its higher priced medical business and higher year-on-year sales from consumer electronics, the company reported a lower average selling price of £62.50 per kg, down from £71.10.

At a constant currency level, it reported 8% growth in revenue for the year.

The company’s gross profit also rose 3% from £163.2m to £168.2m, and declared a 4% increase to the final dividend of 35.09p.

Chief executive David Hummel said its strong and balanced portfolio helped to drive growth and overcome foreign currency, weaker oil and gas, and US medical industry headwinds.

"Our development pipeline is strong and continues to offer significant long term potential, alongside our 7,000 tonnes of PEEK capacity, our technical excellence and our application development know-how.”

The company also revealed its new formal capital framework, which prioritises investment for both organic and acquisition growth to support the company’s pipeline programmes while offering the opportunity for enhanced shareholder returns.

Under the plan, approximately 50% of net cash will returned in the future through special dividends, subject to a 50p per share de minimis level.

A final regular dividend of 35.09p per share was unveiled (Credit Suisse target price: 36.83p), but management did not approve another special payout of 50p, as in fiscal year 2014.