Morgan Advanced Materials profits rise amid 'broad-based' growth
Morgan Advanced Materials reported organic constant-currency revenue growth of 4.2% in its first half on Thursday, to £461.2m, with “broad-based growth” across its healthcare, semiconductor, energy and industrial segments, while on a reported basis, revenue was down 3.5% year-on-year.
The FTSE 250 company said its adjusted operating profit margin was 12.8% for the six months ended 30 June, up 170 basis points, driven by the acceleration of the benefits from its restructuring programme and volume leverage.
Group adjusted operating profit was up 29% on an organic constant-currency basis, or 11.7% as reported, to £59.1m.
Pricing and continuous improvement efficiency actions were still more-than-offsetting cost inflation, the board said, as it reported “strong” first half cash flow, with free cash flow coming in at £36.5m, up from £26.4m year-on-year.
That drove a further reduction in leverage, with its net debt-to-EBITDA ratio, excluding the impact of IFRS 16 leases, being 0.5x for the period.
Adjusted earnings per share were up 10.4% year-on-year at 12.7p, while the board declared an interim dividend of 3.2p, up 60% on the interim distribution it declared in the fourth quarter of 2020.
Morgan said its carbon dioxide emissions were reduced by 17% compared to the prior year.
“We have seen the business return to organic growth, with a broad-based recovery in our end markets and with benefits from the growth initiatives we have taken in the implementation of our strategy,” said chief executive officer Pete Raby.
“Profitability has improved significantly, with the delivery of our restructuring programme savings ahead of target and continued progress in pricing and continuous improvement actions which are more than offsetting cost inflation.
“We have good momentum going into the second half of the year and we expect to see an acceleration of organic growth and a further improvement in margins as we continue to execute against our strategic priorities.”
At 0920 BST, shares in Morgan Advanced Materials were up 3.2% at 387p.