Victrex Q3 revenue drops 18% as Covid-19 hits demand
Victrex plc
1,272.00p
16:57 19/04/24
Victrex said revenue fell 18% in the third quarter as the Covid-19 crisis hit demand from industrial and medical customers.
Chemicals
9,390.47
17:10 19/04/24
FTSE 250
19,391.30
17:09 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
The FTSE 250 maker of polymer products said the quarter started solidly in April but that volume and revenue fell by more than 20% in May and June. As a result revenue dropped to £58.8m in the quarter from £72m a year earlier as volume fell 12% to 805 tonnes.
Victrex said aerospace, automotive and energy markets were weakest and that its performance was slightly weaker than market indicators. Delayed elective procedures hit medical sales from April and monthly revenue declined by up to 40%.
Margins were squeezed in the third quarter by reduced demand for more profitable medical products and underuse of operations with fixed costs. Victrex said these effects would continue to affect margins for the rest of the second half and into the following financial year.
Victrex said its net cash position was slightly better than expected at £72m, up from £53m at the end of March, including £8m ringfenced for its China manufacturing subsidiary. It has an undrawn revolving credit facility of £20m and a £20m accordion facility.
The company said it was unable to provide detailed financial guidance and that it would review its dividend, deferred at the half-year stage, later in the year before making a decision on the annual payout.
"With lower production levels reflecting weaker demand and planned inventory reduction, and consequently the under-absorption of fixed costs, together with a weaker mix, margin is anticipated to be further impacted in the second half and into FY 2021," the company said.
"Whilst market indicators may remain negative across many of our end-markets as we move into our next financial year, we anticipate being in a better position later in the year to assess the outlook."
The company's shares, down 24% in 2020, fell 3.2% to £19.22 at 08:46 BST.