COVID-19 Update

RNS Number : 1265I

Morgan Advanced Materials PLC

31 March 2020

 

Press Release

Morgan Advanced Materials plc

31 March 2020

COVID-19 update

Our employees and customers

The health, safety and wellbeing of our employees is our absolute priority. We are following the varying advice of local governments around the world as the situation develops, and have wound down some operations and closed sites in geographies where that is required.  We also continue operations with heightened safety measures where appropriate, and we continue to service customers in key industries such as healthcare, food production, energy and critical infrastructure.

Financial and operational performance

Sales for the 12 weeks to 21 March 2020 were 3.2% lower for the Group, on an organic constant-currency basis,  compared to the same period of last year.  Excluding China, the group was 0.2% lower than the prior year. 

By business, the organic-constant currency trends for the same period compared to prior year are as follows.  Within the Carbon & Technical Ceramics division, sales were 0.6% lower than the prior year, with growth in Seals & Bearings partially offsetting a decline in Electrical Carbon, and with Technical Ceramics broadly flat.  Sales for the Thermal Products division were 6.7% lower than the prior year. 

While we are currently seeing the position improve in China, with all of our factories there reopened, the COVID-19 outbreak has escalated globally. At this point we have six businesses closed across Italy, India and South Africa. The situation remains highly uncertain and it is therefore impossible to predict with any degree of certainty the impact this will have.  We are consequently withdrawing our previous guidance for 2020.

Mitigating actions and financial position

While significant uncertainty exists around the impact of COVID-19, we have taken immediate action to reduce costs and improve cash flow and liquidity.  These include reductions to capital expenditure other than for vital health, safety and environmental matters, a temporary hiring freeze for all but the most critical roles, and a curtailment of discretionary expenditure.  The Board members have agreed to a 30% salary reduction, effective 1 April, for the rest of the financial year. 

With respect to our financial position, we have no debt maturities until 2023, and as at 31 December 2019 we had:

· net debt excluding lease liabilities of £157 million

· a net debt / EBITDA ratio (pre-IFRS16) of 1.0 compared to a covenant not to exceed 3.0

· interest cover (pre-IFRS16) of 17.6 compared to a covenant to be greater than 4.0

· cash of £68 million and £150 million of headroom under our committed £200 million revolving credit facility.

Despite the strength of the Group's balance sheet, given the rising level of uncertainty as to how the situation will develop, we are taking all appropriate measures to preserve the Group's cash and liquidity position.  Accordingly, the Board has decided to withdraw the proposed 2019 final dividend which was due to be approved at our forthcoming Annual General Meeting. The Board has also decided to suspend the dividend payable on the preference shares.  We will review these dividend decisions later in the year once the outlook is clearer.

We have a global diversified business, a clear strategy and a strong balance sheet.  We remain focussed on protecting our colleagues, containing our costs and preserving our financial position.

This announcement contains inside information.  The person responsible for the release of this announcement on behalf of Morgan Advanced Materials plc is Peter Turner, Chief Financial Officer.

For further enquiries:

Pete Raby	Morgan Advanced Materials plc	01753 837 000
Peter Turner
Nina Coad	Brunswick	0207 404 5959

 

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