Trading Statement

Morgan Crucible Co PLC
04 December 2006


The Morgan Crucible Company plc ('Morgan'), the specialist materials company,
issues its pre-close trading update ahead of its 2006 full year results to be
announced on 20th February 2007.

Trading Highlights

   •The momentum in Group profit margins has continued into the second half
    of the year with underlying operating profit margins before restructuring
    and one-off costs expected to approach 11% for the full year


   •2006 like-for-like sales growth from continuing businesses has remained
    robust and is forecast to be over 7% for the year on a constant currency
    basis. The weakness of the US dollar in the second half of the year will
    negatively impact the Group's sterling reported numbers compared to 2005


   •The three year profit improvement plan is now drawing to a close having
    achieved double digit operating profit margins well ahead of schedule


   •The balance sheet remains very healthy with negligible levels of net debt
    giving the scope to invest in profitable growth both organically and through
    appropriate bolt-on acquisitions


   •Given this financial strength, the Group is pleased to announce that it
    will be initiating an ongoing share buyback programme of up to £50m to
    improve balance sheet efficiency


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

'Our 2006 results will continue to reflect the ongoing improvements that we are
making in our business and to the quality of our earnings stream. Our strategy
remains to focus on higher margin, higher growth, higher value-added products
and markets and to continue to move away from more commoditised and cyclical
market segments. In parallel we will continue to drive down our cost base as we
further rationalise our manufacturing footprint and increase our proportion of
manufacturing in low-cost locations. The successful delivery of our profit
improvement plan and our robust balance sheet puts Morgan in a strong position
to continue to target mid-teen margins. As a result, the Board looks to the
future with confidence. '


Divisional Trading Comment

Carbon

The Carbon division has continued to trade well in the second half of 2006, with
sales and operating profit margins ahead of the first half of the year and well
ahead of 2005 comparatives. These improvements have been made across almost all
regions and markets. The Americas business has remained strong in the
traditional seals and bearings and electrical brush markets and there has been
further growth in the Armour business with investment being made in additional
capacity to meet demand levels. In Europe, there have been further signs of
business improvement including new Armour opportunities. The Asian business has
also continued to show good growth, particularly in China and Taiwan. The major
restructuring projects have progressed well including a number of site
rationalisations and these have contributed to reduced overheads and improved
operating profit margins.

Technical Ceramics

The Technical Ceramics division has enjoyed good underlying trading in the
second half of the year which, combined with a particularly strong first half,
leaves the business well placed to show healthy margin improvement over 2005. As
we indicated in our half year results, the high top-line growth rates in the
first half of 2006 were somewhat flattered by the significant increases we saw
in precious metal prices which feed straight through to our revenues but have a
negligible impact on our operating profits. As precious metal prices have
declined from their peaks this will be reflected in lower headline reported
revenues for Technical Ceramics in the second half. The business remains focused
on continued profit margin progression with improvements seen in all regions in
2006, supported by investment in new product introductions. Although raw
material and energy costs have increased compared to 2005 these have been
countered by a combination of operational efficiencies and price increases.
Globally, the industrial equipment, medical, aerospace and electronics segments
continue to show good growth. The US markets have remained strong and our
European business is also seeing strong performance, particularly in laser and
power tube products for communications and security equipment. In Asia the
additional capacity recently installed to meet demand for the thermal processing
market is now fully utilised and further expansion is anticipated as a result.
As we look forward, a product line with one of our larger US customers comes to
the end of its natural life in 2007 which will mean top line growth next year is
likely to be more muted than the double digit growth of Technical Ceramics we
have seen over the past three years. Overall the new business pipeline remains
healthy.

Thermal Ceramics

The Thermal Ceramics division has continued to see good revenue growth over
2005.  The drivers are continuing positive market conditions in the USA, Middle
East and Asia, as well as a number of major orders for aluminium and
petrochemical projects sourced from our European production sites.
The Thermal business has seen the largest impact for any Morgan division of
rising input prices over the past couple of years, particularly for energy and
alumina costs. However, we have taken a number of steps to counteract these
margin pressures both in terms of operational improvements and price increases
in January 2006 and again in July. Furthermore an additional overhead and cost
rationalisation programme was implemented earlier in the year, including the
closure of fibre production in the UK.  The new Joint Ventures in China and
Russia have started well, while the Vesuvius fibre acquisition in the US is now
fully integrated into our organisation and operations. Overall, margin
improvement has continued in the second half of the year for the Thermal
division and the order books remain solid in all regions.

Crucibles

Trading conditions have remained relatively stable during the second half of the
year, following a period of sustained improvement during the first half year.
Overall, demand in the Americas, the Middle East and in most parts of Asia was
relatively robust, with only the European region remaining flat. Further
progress was made in consolidating our Indian manufacturing operations,
following the acquisition of the Diamond Crucible Company in Gujarat, earlier in
the year. Additional sales resources have recently been deployed in India, China
and in Malaysia in order to exploit continuing market growth in the region.

Financial Position

The Group has continued its profit improvement programme into the second half of
2006 which combined with healthy top line performance should see us achieve
close to 11% underlying operating margins for the full year. As over 40% of
Group revenues and over 50% of profits are dollar denominated, the weakening of
the US dollar in the second half of the year will negatively impact our results
when translated back into sterling. A movement of 1 cent in dollar exchange
rates costs us c. £1.5 million in annualised revenue and over £200k in operating
profit. The average exchange rate for the US $ to the pound was $1.79 for the
first half of the year. By the year end we estimate that the 2006 annual average
exchange rate is likely to be c. $1.85. The impact of this 6 cent move
represents a reduction of £9 million of revenues and c. £1.2 million of
operating profits on the 2006 results vs the half year exchange rate position.

The restructuring activity from our three year profit improvement plan is
nearing completion. As part of our ongoing plans there will be further
restructuring activity as we pursue profitable growth opportunities both
organically and through acquisition, as well as continuing to rationalise our
manufacturing footprint and drive down our fixed cost base. Cash costs of this
restructuring are likely to be in the £5 - £10 million range annually with the
goal being to target a close to one year cash payback on restructuring
initiatives.

As we announced in August, the Board received a preliminary approach for an
acquisition of the Group. Following careful evaluation and in depth discussions
with the prospective buyer the Board took the decision to terminate talks in
October. The Group incurred professional fees in relation to the approach
amounting to c. £2.5 million. These will be shown on a separate line in the
income statement as a one-off item.

Our virtually debt free balance sheet gives the Group the flexibility to pursue
bolt-on acquisitions, continue organic investment in our core businesses and, as
announced today, to initiate an on-market share buy back scheme to return up to
£50 million. The acquisitions we have made in 2006 are fully integrated into the
Group and are performing well.

In summary, we remain confident in the strength of our top line performance and
in the continued improvement in our operating profit margins. We enter 2007 from
a position of strength and look to the future with optimism.


For further information, please contact:

The Morgan Crucible Company Plc
Victoria Gould                               01753 837 237 
Director of Group Communications

Finsbury Ltd
Robin Walker                                 020 7251 3801 
Patrick Allerton                            


                      This information is provided by RNS
            The company news service from the London Stock Exchange