Victrex defers dividend as Covid-19 'headwinds' mount

Victrex deferred its interim dividend as it reported lower first-half profit and pressure on its order book from the Covid-19 crisis.

Underlying pretax profit for the six months to the end of March fell 1%, or 11% at constant currency, to £52m from a year earlier. Revenue increased 4% to £151.5m. Reported pretax profit also fell 1%, or 11% at constant currency, to £49.9m.

The FTSE 250 polymer producer said the first half was in line with its expectations as growth in automotive and medical markets helped offset weaker energy business after oil prices plunged.

Victrex said the third quarter had gone as expected so far but that it saw "emerging headwinds from Covid-19 in our forward order book, particularly in aerospace and automotive, with energy already seeing very tough conditions".

The company said with the outlook uncertain the board had decided to defer a dividend for the first half. Any payment would depend on economic and market conditions in the next few months, it said. To conserve cash, a £15m plan to unblock a UK bottleneck has been put on hold until 2021.

Chief Executive Jakob Sigurdsson said: "We have implemented a range of cash conservation measures, including deferring our debottlenecking programme and a decision on our interim dividend, and alongside our net cash position and available facilities, our balance sheet remains strong."

Victrex said its financial position was strong with a net cash position of £53.2m a the end of March, an undrawn £20m revolving credit facility and a £20m "accordion" credit line. It said under an extreme scenario of reduced demand into 2021 it would be able to manage while investing for the long term.