Victrex in line in third quarter, consumer electronics still struggles

High-performance polymer company Victrex released its interim management statement for the third quarter on Tuesday, covering the period 1 April to 30 June.

The FTSE 250 firm said performance continued in line with expectations during the quarter.

Its board said the core business remains robust, with growth in aerospace and automotive and a steadier performance in oil and gas.

Victrex said its medical business was in line with the prior year period.

“As expected, the group's overall performance in the quarter was offset by limited volumes in the large consumer electronics order during Q3, compared to a strong Q3 2015,” the board said in a statement.

“As previously communicated, these volumes will be much more back-end loaded into Q4 this year, with second half volumes still expected to be double those in the first half.”

Group revenue during the quarter was down 6% to £60.6m, with group sales volume down 10% to 966 tonnes.

Excluding consumer electronics volumes, overall performance was marginally ahead of the strong Q2, the board said.

“Cash generation has remained healthy and there have been no significant changes to the group's financial position since our interim results announcement.”

Looking ahead, Victrex repeated that the core business remains robust for 2016 and it was continuing to focus on cost opportunities.

The board claimed it remains on track for a second half improvement and is comfortable with current expectations for the full year.

“Variability in end user demand and supply chain dynamics means the consumer electronics market continues to offer limited visibility,” the board said.

“Our early planning assumptions for 2017 now suggest these volumes will be significantly lower, compared to 2016.

“We do, however, remain encouraged by medium to longer term growth opportunities within consumer electronics and have market-wide development programmes in progress, for both volume and value opportunities,” the board explained.

It said lower consumer electronics volumes in 2017 would improve the group's sales mix, although it would be less beneficial for operating leverage, reflecting higher fixed costs.

Currency for 2017 has now become more supportive, it added, although rates continue to be volatile and Victrex said hedging is already in place for nearly two-thirds of the FY17 financial year.

“Victrex remains in a good position for the medium to longer term.

“The group has a strategy to further increase our differentiation, a strong pipeline of potentially game-changing projects and a highly cash generative business model,” the board said.