Trading Statement

Morgan Crucible Co PLC
03 December 2007


The Morgan Crucible Company plc ('Morgan Crucible'), the advanced materials
company, issues its pre-close trading update ahead of its 2007 full year results
to be announced on 19th February 2008.

Trading Highlights

  • The second half of 2007 has seen revenue momentum for the Group continue,
    albeit at a more moderate pace than the particularly strong growth level
    seen in H1. Year on year revenue growth for the full year on a constant
    currency basis is expected to be over 5%

  • Group underlying operating profit margin before one-off items for the
    full year is expected to be in the mid 12% range continuing the positive
    momentum seen over the last several years

  • As we noted at the half year the weakness of the US dollar, which has
    shown further declines in the second half of 2007, will have a significant
    negative translation impact on the Group's sterling reported numbers.
    Currency translation effects are forecast to represent a c£30m impact to
    revenue compared to the prior year and a c£6m impact to underlying operating
    profit

  • As we currently stand, our order books remain healthy at the same levels
    as this time last year. Given the global macro economic environment we
    continue to monitor the leading indicators in our end markets closely.


Commenting on the results, Mark Robertshaw, Chief Executive Officer, said:

'Our full year results for 2007 will show strong progress on 2006 in overall
Group operating profits and profit margins both before and after one off items.
We continue to deliver on our strategy of focusing on higher margin, higher
growth, higher value-added products and markets and moving away from more
commoditised and economically cyclical market segments which we continue to do
successfully.

Our market positions are strong and our order books currently remain healthy. In
light of the recent market volatility and macro economic concerns, the Board
will be keeping a watchful eye on how global demand develops in the coming
months but we remain cautiously optimistic about our prospects for continued
margin progression next year.'


Divisional Trading Comment

Carbon

The Carbon division in 2007 will show progress over 2006 in terms of revenues,
profits and operating profit margins. This positive momentum will be achieved
despite difficulties in the second half of the year in the American armour
business, and some volume and pricing challenges in our traditional European
markets.

In the second half of the year, our American armour business has been impacted
by one of our key customers suffering from production issues. The resultant
slowdown in the customer's production has impacted our top line by c£5m. We took
rapid and decisive action by working closely with our customer to help them
correct these issues. Our sales have improved significantly in Q4 as we
re-established production commensurate with first half levels. In our other end
markets in the Americas, our traditional businesses have continued to deliver
good results albeit with some softening in our industrial end markets. Sales to
the high temperature furnace industry in particular are growing significantly,
with additional capability and capacity being added to support this growth.

Whilst our traditional European business faces a challenging market of
relatively flat volumes and pricing pressures, we are generating good growth in
our German-based Rotary business. In addition, we have installed new armour
manufacturing capability and capacity in the UK where orders and sales are
showing encouraging development. The NP Aerospace business in which we acquired
a 49% stake earlier this year is trading very well with a strong order book for
2008.

Our Asian business is delivering in excess of double-digit revenue growth, with
particularly good performance from China. However an ongoing industrial dispute
in our Indian facility will adversely impact our second half results.

Whilst the major restructuring projects in Carbon are now complete we have an
ongoing focus on cost control in terms of low cost manufacturing initiatives and
overhead management. The process of moving business to our low cost
manufacturing sites continues as we make ongoing investments in capability and
capacity in locations such as Hungary, Mexico and China.

Technical Ceramics

During the year, Technical Ceramics has maintained its ongoing focus on positive
mix shift towards higher margin, higher value added end markets such as medical
and aerospace. In parallel, our continuous improvement programme in operations,
our cost reduction initiatives in fixed overhead, and our emphasis on positive
price pass through have all contributed to the further improvement in operating
margins which we expect to report for 2007.

As we said earlier this year, at constant currency the 2007 revenues in
Technical Ceramics will be slightly reduced due to one major product line with a
large US customer coming to the end of its lifecycle in 2006. Despite this we
expect to show good progress over 2006 in terms of operating margins and profit.

Looking forward, the US market generally remains healthy although we remain
vigilant for any signs of a downturn. Our business in Asia, although smaller, is
robust and our European business has been particularly strong in the second
half. In Europe and North America a highlight of 2007 has been the strength of
our medical and aerospace customers. Developing our exposure to these sectors
remains a major theme for the division and these areas of activity we continue
to build on.

Overall our order books remain robust. Our new business pipeline also has
several strong prospects for 2008. As a result, the outlook for renewed top line
growth and margin growth in 2008 looks promising.

Thermal Ceramics

The last two years of trading have seen the Thermal Ceramics division deliver a
very strong level of growth in revenues on a constant currency basis. As we
highlighted in our interim statement, the second half of the year will see a
moderation in this rate of growth, owing to the high proportion of large
project-based sales shipped prior to June.

The key growth region in 2007 has been Europe, driven by large project orders
from regional customers for delivery to the Middle East and Asian markets,
particularly for aluminium, petrochemical and iron & steel projects. Similarly,
Latin America has been strong with a number of large project orders.

Gross margins have improved during this year, with price increases and cost
efficiencies offsetting the continued rises in energy and raw material input
costs. Operational improvements continue to be a key area of focus with scope to
drive further margin improvements going forward. Overall operating profit
margins in 2007 are forecast to show healthy levels of progress compared with
2006.

The order book currently remains good. Looking further ahead into next year, we
detect some signs of potential market softening in North America and parts of
Europe but prospects within Asia remain solid.

Molten Metal Systems

Trading conditions have remained firm throughout the year with demand in Europe
and in Asia both ahead of the previous year. However, North American demand has
been affected by the weaker automotive and construction sectors, with results
from the region also directly impacted by the falling value of the US dollar.
Overall operating margins have improved due to continued operational leverage
offsetting adverse currency movements. The upgrade of our German and Indian
manufacturing plants is progressing to schedule and construction of our new
crucible manufacturing facility has commenced in Suzhou, China. Completion of
these projects in 2008 will see our global production capacity more closely
aligned with anticipated levels of future regional demand.

Financial Position

The full year results for the Group will see continued revenue momentum at over
5% growth on a constant currency basis albeit year on year revenue growth in the
second half will be lower than the particularly strong levels delivered in H1.

As noted, Carbon has been impacted by one of our key customers suffering
production issues in the second half of the year resulting in a loss of sales of
c£5m

In Thermal we have seen very strong growth in large project business over the
past twelve months which sets high comparatives for H2 2006 and H1 this year.
Despite these high comparatives we are still seeing positive year on year
revenue growth in the Thermal businesses but at a more modest level than from
the previous twelve month period.

Our order book for the Group currently remains healthy at the same level as this
time last year.

Our underlying operating profit margins before one-off items have continued to
improve and are expected to be in the mid 12% range which would be an
improvement of c150bps over 2006.

The Group has highlighted the impact that currency has had on our results in
previous trading updates. With the continuing weakness of the US$ and a basket
of other currencies our reported £sterling numbers are adversely impacted.
Currency translation effects are forecast to represent a c£30m impact to revenue
compared to the prior year and a c£6m impact to underlying operating profit.

In the second half of the year we have continued to undertake restructuring
initiatives, notably manufacturing footprint rationalisations, as part of our
'business as usual' activities. Our forecast gross spend on restructuring for
the full year remains in the region of c£10m as highlighted in our trading
statement in June.

The Group continues to have a strong balance sheet which provides the
flexibility to pursue our stated strategy of pursuing bolt-on acquisitions to
accelerate profitable growth in our core businesses. Following the successful
purchase of a 49% stake in NP Aerospace in July for £41 million, our net debt is
forecast to be approximately one times EBITDA at the end of 2007. Our share
buyback programme has continued in the second half of the year and we have now
purchased and cancelled shares to the value of c£48m.

Overall Outlook

Given the recent macro economic concerns the Board will be keeping a close eye
on market developments in the coming weeks and months. However, our leading
market positions and the diversity of the business both geographically and by
end market segments leave us cautiously optimistic about the prospects for
further operating profit margin progression in 2008.








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