Trading Statement

Morgan Crucible Co PLC
04 July 2007


The Morgan Crucible Company plc ('Morgan Crucible'), the specialist materials
company, issues its pre-close trading update ahead of its 2007 half year results
to be announced on 1st August 2007.

Trading Highlights

  • Revenue growth in the first six months of 2007 has remained robust and is
    forecast to be c.8% on a constant currency basis with a particularly strong
    performance from the Thermal Ceramics business


  • Group operating profit margins postrestructuring are showing pleasing
    upward momentum from 6.3% in the first half of 2006 to over 11% in the first
    half of 2007


  • The momentum in Group underlyingprofit margins has continued into 2007
    with margins before restructuring and one-off costs expected to be over 12%
    for the half year compared to 10.6% in the first half of 2006 with all
    divisions once again delivering margin progression


  • The Group continues to pursue acquisitions whilst in parallel improving
    its balance sheet efficiency through an ongoing share buy-back programme. As
    at 29th June c.12.5 million shares have been repurchased and cancelled at a
    cost of c. £34 million representing c. 4.4% of total shares in issue at 29th
    June 2007.


Commenting on the first half performance, Mark Robertshaw, Chief Executive
Officer, said:

'I am pleased with the Group's progress in the first half. Our strategy remains
to focus on higher margin, higher growth, higher value-added products and
markets and to continue to drive down our cost base as we further rationalise
our manufacturing footprint and increase our proportion of manufacturing in
low-cost locations.

We are also continuing to look actively for acquisitions to support our core
businesses; however we are determined to maintain our financial and strategic
discipline if we believe sellers' price expectations to be unrealistic. The
healthy organic growth of the Group combined with our robust balance sheet put
Morgan Crucible in a strong position to continue to drive towards our target of
mid-teen operating profit margins'


Divisional Trading Comment

Carbon

The Carbon division has had a good start to 2007 with revenues and operating
profit margins ahead both of the 2006 H1 comparatives and the 2006 full year run
rates. Sales increases have been particularly strong in the Americas and in
Asia. The main growth in the Americas has been in the armour business where
volumes are benefiting from the capacity expansions we have made over the past
several months. Sales into the semiconductor and high temperature furnace
markets are also showing good growth. All parts of Asia have shown sales and
profit growth compared to the prior year, particularly in China and Taiwan. Our
European business has seen double-digit growth in the Rotary business and there
has also been good progress in India and Turkey/Middle East whilst the
traditional European markets remain mature with only modest growth.

The major restructuring projects have been completed and are contributing as
intended to improved gross profit margins and reduced overheads. The process of
moving business to our low cost manufacturing sites continues.
Technical Ceramics

Overall, the Technical Ceramics division will show limited revenue growth in the
first half of 2007 compared to the same period last year. As we have indicated
in prior trading statements this is in large part due to one major product line
with a large US customer coming to the end of its lifecycle in 2006. That aside,
underlying markets generally continue to be strong in Europe and Asia, and
healthy in the USA. In total, order books are now up on this time last year, and
our new business pipeline continues to show promise.

The division's focus on active product mix management, continuous improvement of
manufacturing efficiency and tight fixed cost control remains robust and is
delivering further improvement in operating profit margins.

Thermal Ceramics

The Thermal Ceramics division has continued to see strong revenue growth over
prior year levels.  While the US and Asia have shown further progression, the
main impetus has come from our European businesses where the drivers have been a
series of major orders for aluminium, petrochemical and iron & steel projects
for delivery into the Middle East, Indian and Asian markets.

There has been improvement in gross margins over last year, driven by
successfully implemented price rises and some easing in energy and raw material
price increases. This, together with tight control of overheads, has led to a
good improvement in overall profit margins.

Project based sales have been very strong in the first half of the year,
continuing from 2006. As a number of large orders will have shipped in H1 these
project-based sales are not expected to show the same rate of progression in the
second half of the year. Nevertheless the overall order book remains at strong
levels compared to prior years. With its worldwide footprint and market leading
position, Thermal Ceramics is well placed to capitalise on the opportunities
that arise in the increasingly global marketplace.

Molten Metals Systems

Trading conditions overall remained relatively stable during the early part of
2007. Whilst gross margins fell slightly as a consequence of deteriorating
exchange rates on exports from our European manufacturing plants, operating
margins overall improved due to continued operational leverage and cost
efficiencies. The upgrade of our German and Indian manufacturing facilities is
well underway and plans are now well advanced for the establishment of a Chinese
manufacturing plant, to be on stream in 2008, to capture an increasing share of
the growing market in Asia.

Financial Position

The first half of the year has seen strong progress once again in both top and
bottom line performance with operating profit margins continuing to improve
across all divisions. Organic growth remains robust with a particularly strong
performance in the first half of this year from our Thermal Ceramics business.

As part of our 'business as usual' activities we continue to rationalise our
manufacturing footprint and drive down our fixed cost base. We anticipate our
gross annual spend on ongoing restructuring to be in the region of c. £10
million resulting in a net spend of £5-6 million after part year benefits have
been accounted for.

Whilst the business is performing strongly on a constant currency basis, the
strength of sterling in 2007 will impact the Group's financial results for the
first half of the year. The weakness of a number of currencies, particularly
those related to the US dollar, will negatively impact our revenues by c. £20
million and approaching £4 million on our underlying operating profit compared
to the last half year.

The strength of our balance sheet gives us the flexibility to pursue bolt-on
acquisitions to support our core businesses and accelerate our growth strategy.
As we have indicated before, if we are unable to find suitable acquisitions at
the right price we are committed to improving balance sheet efficiency as we
have demonstrated with our share buy-back programme.

In summary, the Board remains confident in the strength of our core businesses
and in the potential for continued improvement in our operating profit margins.
The platform we have created allows us to look forward to further progress in
the second half of the year.


The Morgan Crucible Company plc                             01753 837000
Mark Robertshaw - Chief Executive Officer
Kevin Dangerfield - Chief Financial Officer

Finsbury                                                    020 7251 3801
Robin Walker
Claire Strange




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