Trading Update

RNS Number : 6561W

Morgan Advanced Materials PLC

11 November 2014

 



Press Release

Trading Update 

Morgan Advanced Materials plc

11^th November 2014

Morgan Advanced Materials plc, the advanced materials company, is today issuing the following trading update regarding the period from 1^st July 2014 to 10^th November 2014.

Trading performance in the four months to the end of October was encouraging overall and in line with management expectations. Our book to bill order ratio remains positive at 1.04 for the year to date and the outstanding order book is c6% higher than at the end of October last year on a constant currency basis. Given the order profile, the Group expects to achieve c3% revenue growth in the second half of the year on a continuing and constant currency basis compared to the second half of 2013.

Across our three regions, Asia/Rest of World continues to show the strongest trading year to date compared to last year. In North America, trading conditions continue to be mixed with the Thermal, Electrical and Seals and Bearings businesses all showing growth, offset in part by softer end-markets in the Technical Ceramics businesses. Europe continues to have a stable order book overall but with little sign of any general market improvement.

The Group is continuing to make good progress on its strategy of investing in technology differentiation and profitable growth.  Since the half year results, we have continued to implement actions aimed at further strengthening Morgan's sustainable competitive advantage for both top line growth and margin enhancement. From a profitable growth perspective, construction is now well underway on our state of the art greenfield fibre plant in Abu Dhabi. This site will be fully Superwool® fibre enabled and, once fully operational, will be Morgan's lowest cost fibre plant in the world, leaving it well placed to meet both the significant local demand and also for export opportunities for Morgan's strongly growing high-temperature fibre business. We are also pressing ahead with construction of a new greenfield site in South Korea to accelerate our Asian growth opportunities in carbon and advanced ceramics markets. The establishment of our Global Materials Centre of Excellence in Stourport, UK for Structural Ceramics is now underway. This is due to be operational in early 2015 with the aim of providing the Group with significantly enhanced new business development opportunities. From a medium to longer term perspective, we have announced a strategic collaboration with the Nobel prize-winning team at Manchester University focused on developing potential new processes and end-market applications for graphene materials.

Since the detailed review of its portfolio and operations 18 months ago, as part of the new 'One Morgan' organisation change, the Group has made good progress exiting and selling businesses that do not meet our growth, margin and technical differentiation expectations and focussing on those businesses with core long-term sustainable competitive advantage.  We expect to have identified solutions for those businesses by the year end. Where we have opportunities for synergistic bolt-on acquisitions with high growth and return potential, such as the Porextherm acquisition made in July, we remain active in pursuing these, underpinned by our strong operating cash flow and healthy balance sheet. Those businesses that have undergone significant operating improvement since the One Morgan structure was announced last year are performing well, particularly the Electrical and Seals and Bearings businesses. As part of the strategic objective to drive the performance of these businesses to mid-teen margins and beyond we are undertaking a significant rationalisation of the carbon materials footprint at a charge of c£16 million in 2014, c£7.5 million of which is cash for an annualised benefit of c£3 million (c£1 million of benefit in 2015). This specific programme is in addition to the restructuring and one-off charges that we have incurred in 2014 of c£6 million bringing the total restructuring and one-off charges to c£22 million for 2014.

Financial position

There were no significant events or transactions during the period which resulted in a material impact on the financial position of the Group. The Group refinanced its previous £150 million RCF with a new five year, £200 million facility on 17^th October, with significantly reduced interest costs. With this refinancing and the repayment of $100 million of US Private Placement debt in December 2014, the Group's net bank interest charge on a continuing organic basis and at present interest rates will be reduced by c£3 million in 2015 compared to 2014.

Chief Executive Officer, Mark Robertshaw said:

"Overall, the Group is delivering attractive margins and cash flow in challenging market conditions whilst continuing to invest strategically in technology and profitable growth to reinforce Morgan's differentiation and sustainable competitive advantage."

For further enquiries:

Mark Robertshaw	Morgan Advanced Materials plc	01753 837000
Kevin Dangerfield	Morgan Advanced Materials plc	01753 837000
Mike Smith/Nina Coad	Brunswick	0207 404 5959

 

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