Q3 Trading Update

RNS Number : 4469E

Morgan Advanced Materials PLC

06 November 2020

 

Press Release

Morgan Advanced Materials plc

06 November 2020

Q3 trading update

Our employees and operations

The health, safety and wellbeing of our employees is our top priority. We continue to operate our heightened safety measures such as social distancing and hygiene protocols in all of our facilities to ensure the safety of our employees and we continue to follow the advice of the relevant local governments.  All of our plants are operating at this time.  

Current trading

Sales for the nine months to 30 September 2020 were 9.8% lower for the Group, on an organic constant currency basis, compared to the same period last year.  This reflects a 11.5% organic constant currency decline in the third quarter, an improvement from the 15.4% decline seen in the second quarter.

By business, the organic constant currency trends for the nine months to 30 September 2020 compared to the same period last year are as follows:

-  Carbon & Technical Ceramics division sales were 6.3% lower, with growth in Seals & Bearings partially offsetting declines in Electrical Carbon and Technical Ceramics. 

-  Thermal Products division sales were 14.1% lower. 

With respect to order trajectory, we have seen an improving performance since the position reported at the half year, with average daily order intake improving to a year on year decline of around 15% in August to October.

Mitigating actions

Throughout the downturn we have taken appropriate action to reduce costs, improve cash flow and increase liquidity.  These include reductions to capital expenditure other than for vital health, safety and environmental matters, a temporary hiring freeze for all but the most critical roles, a curtailment of discretionary expenditure and temporary salary reductions for the Executive team and Board. 

The restructuring programme announced in July is on track, with all of the major plant closures now announced, and key activities underway to structurally improve the efficiency of our businesses.  This will reduce costs by £20 million per annum by 2022, with an anticipated cash cost of £30 million to deliver these savings.

Financial position

As at 30 September 2020 we had net debt (excluding lease liabilities) of £129 million, a £19 million improvement during the third quarter.  We have significant liquidity, with cash and cash equivalents of £136 million and undrawn headroom of £119 million under our revolving credit facility, and no debt maturities until 2023.   

Interim dividend

The Board recognises that dividends are an important part of the returns for shareholders. With the improving order trajectory since the half year and the strong financial position of the Group, the Board has declared an interim dividend for 2020 of 2.0 pence per share.  The dividend will be payable on 11 December 2020 to shareholders on the register at the close of trading on 20 November 2020. The ex-dividend date is 19 November 2020.

Outlook

Subject to no significant change in Covid related operating restrictions, for the full year we anticipate the Group's organic constant currency sales decline to be in the range of 10-14%, with a return to organic constant currency sales growth anticipated from the second quarter of 2021.

Pete Raby, Chief Executive Officer, said:

 "We are pleased with our improving sales performance in the third quarter and order momentum going into the fourth quarter.  With the sequential improvement in demand together with actions taken across the business, the Board is resuming an interim dividend.  Whilst the current environment remains challenging, we are focussed on protecting our colleagues, serving our customers and preserving our strong financial position.

We are continuing our long-term investments to support the future growth of the business and our restructuring actions to improve efficiency.  We are well positioned to emerge from this crisis stronger, growing quickly as our markets recover and expanding our margins as volumes return to more normal levels."

For further enquiries:

Pete Raby	Morgan Advanced Materials plc	01753 837 000
Peter Turner
Nina Coad	Brunswick	0207 404 5959

This announcement contains inside information.  The person responsible for the release of this announcement on behalf of Morgan Advanced Materials plc is Peter Turner, Chief Financial Officer

LEI: I4K14LL95N2PHDL7EG85

 

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