Victrex trades in line as it launches joint venture

High-performance polymer company Victrex released its first quarter interim management statement on Wednesday morning, ahead of its annual general meeting being held later in the day.

The FTSE 250 firm said it made a solid start to 2017, with a strong performance in the core business compared to a weak Q1 2016.

Q1 2017 sales volumes in the core business - excluding consumer electronics - were 25% ahead of the prior year quarter, reflecting growth across automotive, aerospace, energy and industrial, and value adding resellers.

Electronics, outside of the large consumer electronics order, also saw growth, though the board said Q1 performance was offset by Medical, which was behind last year, principally due to phasing.

Overall, group revenue of £55.7m during the quarter was broadly in line with the prior year at £56.0m, with Q1 2017 group volumes of 810 tonnes down 6% on the same period in 2016.

Q1 2017 performance reflected, as the board said it expected, the very limited volumes from the large consumer electronics order, compared to much stronger volumes in the prior year.

Victrex said it retained a highly cash generative business model, with no significant changes to its financial position since 30 September 2016.

The company also announced that it is investing to help accelerate its Aerospace Loaded Brackets mega-programme, via a joint-venture with Tri-Mack Plastics.

It said the joint-venture, TxV Aerospace Composites, will focus on developing a new supply chain, with the capability to manufacture at scale unique and differentiated loaded brackets at scale, blending new PEEK and PAEK polymer grades and composite materials.

Victrex will have the majority share of the venture, and total capital expenditure from Victrex was anticipated to be around £10m, spread over the next three years.

“This is an exciting acceleration opportunity which builds on our Kleiss and Magma investments and is in line with the group's strategy to move further downstream into selected and differentiated semi-finished products,” said chief executive David Hummel.

“We will continue to pursue acceleration options across several of our mega-programmes, whether organically, through partnership or acquisition.

“Further strengthening and accelerating our growth pipeline remains a key priority for Victrex.”

On its outlook, the company’s board said at such an early stage of the year and with its core business in growth, a continued focus on cost efficiency and a favourable currency environment, it remained comfortable with expectations for 2017.