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[May 2009]
Morgan Crucible Interim Statement
The Morgan Crucible Company plc has just issued its 'Interim Management Statement' regarding current trading, financial performance and outlook for the half year 2009. This statement constitutes Morgan Crucible's Interim Management Statement for the period from 5 January to 14 May 2009 as required by the UK Listing Authority's Disclosure and Transparency Rules.
‘Group revenues for the first half of 2009 are expected to be close to £500m.
The businesses acquired in the past 12 months, and NP Aerospace in particular, are performing well and have contributed c.£75m to Group revenues for the year to date through April.
For the first four months of the year Group revenues, excluding the benefits of acquisitions, are broadly in line with the equivalent period last year with positive currency translation offsetting reduced end-market demand caused by the global economic downturn.
As we indicated in our AGM trading statement last month, we anticipate that end-market demand will continue on a downward trend over the coming months. In response, we have taken further decisive action on our cost base to mitigate the impact on margins. The Group's overall headcount, excluding acquisitions, has now been reduced by over 1,200 employees since the summer of last year and a number of other cost reduction initiatives, such as short time working, have been implemented across our sites.
Operating profit margins before restructuring costs are expected to be in high single digits at the half year, with a greater proportion of the benefits of our cost reduction initiatives anticipated in the second half of the year.
The recent announcement of a new 3 year multi-currency facility for £280m leaves the Group with a strong and supportive banking group going forward.’
Commenting on the year to date performance and outlook, CEO Mark Robertshaw said: "Our expectation of revenues approaching £500 million at the half year reflects the progress we continue to make in our strategy of improving the quality and resilience of our business and in reducing the Group's exposure to economically cyclical markets. However, as we noted in our AGM trading statement last month, our expectation remains that markets will continue to deteriorate further before they improve. As a result, we have taken additional decisive actions to align our cost base to demand including reducing headcount by a further 200 employees in April. We believe these actions position us as a leaner and fitter business for when markets ultimately recover.
“I am delighted that we were able to announce last month the successful renewal of our banking facilities. We believe this successful refinancing signals a strong endorsement from our relationship banks of the Group's financial position and its future prospects."
As far as Technical Ceramics are concerned, the statement said that revenues for the first four months of 2009 for the division were up by around 35% year on year helped by favourable currency translation and the addition of the businesses acquired from Carpenter Technology last year. On a constant currency organic basis, revenues are down by around 11% year on year.
Order intake in the Technical Ceramics division continued on a downward trend in H1 across a number of end markets and in particular in the USA and Europe. Nevertheless, despite the much more difficult environment, the division continues to win new business, particularly in the aerospace and medical markets. The strategic focus on these markets has helped to offset the continuing softness in markets such as construction and semi-conductor equipment manufacture.
The businesses acquired from Carpenter Technology last year have continued to perform well with the synergy benefits coming through as expected. To protect bottom line margins, the division has acted swiftly to implement a wide range of cost reduction programmes and has further initiatives currently underway.
Regarding Insulating Ceramics, Morgan Crucible said that in the first four months of 2009 the Thermal Ceramics business revenues were at a similar level to last year taking into account favourable currency translation. On a constant currency basis, the year on year reduction in revenue this year is about 12%. Order books have continued on a downward trend as the year has progressed and the company expects this to continue over the coming months. End markets such as construction, automotive and iron and steel remain weak while the chemical and petroleum (CPI) sector which had remained fairly robust is now showing some signs of projects being deferred or cancelled. Regionally, the business has shown resilience in its Asian and Latin American markets while North America and particularly Europe continue to see demand deteriorating.
Overall, Morgan Crucible said that the group continued to face a challenging economic environment with demand remaining on a downward trend. However, in anticipation of conditions continuing to deteriorate before they improve, it has been taking decisive action on its operating cost base with the benefits of its cost reduction initiatives expected to have a greater impact in the second half of the year. Morgan Crucible said it believed that these actions position the group well to benefit as end markets ultimately recover.
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ENDS