Morgan Advanced Materials still cautious after first-half growth

The FTSE 250 company said its adjusted operating profit margin expanded by 350 basis points to 12.5%, aligning with its financial framework.

Adjusted earnings per share jumped 48.5% to 14.7p, while return on invested capital improved by 100 basis points to 19.7%.

On a statutory basis, operating profit grew 32.3% to £66.8m, and profit before tax increased by 29.1% to £57.5m.

Continuing earnings per share rose 8p to 13.2p.

Despite a challenging market environment, the company said it maintained a strong balance sheet with net debt including lease liabilities at £270.5m, a 5% increase.

Free cash flow before acquisitions, disposals, and dividends improved significantly, though it remained negative at -£7.9m.

The firm highlighted an 8.2% organic revenue growth on a constant-currency basis, with faster-growing markets contributing 14.9%.

Morgan Advanced Materials also reduced its absolute scope one and two carbon dioxide-equivalent emissions by 11.6% compared to the first half of 2023.

An interim dividend of 5.4p per share was declared, a slight increase from the 5.3p per share in the first half of 2023.

Looking ahead, Morgan Advanced Materials said it remained cautious about demand in several end-markets, but expected full-year revenue growth to reach the top end of its 4% to 7% financial framework.

The company anticipated maintaining its margin at around 12.5% for the full year.

As part of its ongoing business simplification strategy, it was in the middle of reorganising into three segments - thermal products, performance carbon, and technical ceramics - a move expected to deliver £10m in annualised savings by 2025.

“We are continuing to implement our strategy successfully,” said chief executive officer Pete Raby.

“Whilst our constant currency revenue growth benefited from the weaker, cyber impacted, prior year comparator, we have seen underlying revenue growth in both our core and faster-growing markets.

“Our investment in semiconductor capacity, where we continue to see strong demand and have attractive growth opportunities, along with our simplification programme, are both on-track.

“Our balance sheet remains strong.”

At 0934 BST, shares in Morgan Advanced Materials were down 1.55% at 310.62p.

Reporting by Josh White for Sharecast.com.