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[July 2007]
Morgan Crucible Trading Statement
The Morgan Crucible Company plc has issued its pre-close trading update ahead of its 2007 half year results to be announced on 1 August 2007.
Trading Highlights are as follows:
-- Revenue growth in the first six months of 2007 has remained robust and is forecast to be around 8% on a constant currency basis with a particularly strong performance from the Thermal Ceramics business.
-- Group operating profit margins post-restructuring 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 underlying profit 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 29 June around 12.5 million shares have been repurchased and cancelled at a cost of around £34 million representing approximately 4.4% of total shares in issue at 29 June 2007.
Commenting on the first half performance, Mark Robertshaw, CEO, 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"
Commenting on Technical Ceramics, Morgan Crucible said that this division will show limited revenue growth in the first half of 2007 compared to the same period last year. As 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 the 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.
The Thermal Ceramics division has continued to see strong revenue growth over prior year levels. While the USA and Asia have shown further progression, the main impetus has come from the 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 at Thermal Ceramics.
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 world-wide footprint and market leading position, Thermal Ceramics is well placed to capitalise on the opportunities that arise in the increasingly global marketplace.
www.morgancrucible.com
ENDS