Interim Management Statement
8 May 2012
The Morgan Crucible Company plc ('Morgan Crucible'), the advanced materials company, is today holding its annual general meeting and issuing its ‘Interim Management Statement’ regarding trading for the first four months of 2012 and outlook for the full year 2012.
- The Group’s full year expectations remain unchanged.
- Overall, Group revenue in the first four months of the year at reported rates was marginally below the comparable period last year. Group revenue for this four month period was c.4% above the equivalent period last year at constant currency and excluding the effect of lower defence business in NP Aerospace.
- The Ceramics Division has seen positive trading with continued revenue and margin expansion in the first four months of the year, with encouraging revenue improvement from the Thermal business in particular.
- Trading for the Engineered Materials Division has been mixed with the traditional businesses in Electrical, Seals and Bearing and Molten Metal Systems delivering year on year growth. This momentum has been more than offset by softness in demand for Hi Temp products in solar, a slow start to the year in our Chinese business and the reduction in vehicle integration business for the MoD from NP Aerospace.
Overall our full year expectations remain unchanged. Despite a slower start to the year in some of our markets the Group continues to progress the strategy of focussing on positive mix change in our innovative and differentiated technologies and developing businesses in dynamic growth economies. This, together with further operational improvements, positions the Group to make further progress in 2012 against the three year financial goals that were announced in early 2011.
The Ceramics Division consists of the Technical Ceramics and Thermal Ceramics businesses.
The Technical Ceramics business has made a good start to 2012. The positive market conditions seen in 2011, generally continued, with Aerospace and general industrial equipment markets in particular remaining robust. The business also enjoyed good demand for HDD products in the first quarter, which puts this product area in line to achieve further momentum year on year. This strength helped to offset significant weaknesses from the solar market which affected some of our European and smaller Asian companies.
Our Thermal Ceramics business has also made a good start to the year enjoying continued strength from its end markets, particularly from the North American region. In Asia some weakness has been encountered in China and India, due to infrastructure project delays and in Japan with the steel industry consolidation. This lower demand is being offset at the bottom line as a result of margin improvement from our on going operational improvement initiatives.
The savings in our cost base from the merger of the Technical and Thermal businesses continue and are on track to deliver the full £8m of accumulated annual benefits in 2012.
The Division’s continued targeting of markets with strong sector growth and of focusing on differentiated and demanding technical solutions, means that the Division continues to have a positive outlook for 2012.
The Engineered Materials Division consists of the Advanced Materials and Technology (AM&T) business, including NP Aerospace, and the Molten Metal Systems (MMS) business.
The first four months of 2012 has seen mixed performance from AM&T (excluding NP Aerospace) with revenue marginally below 2011 levels. The anticipated growth over the same period in 2011 has been impacted by both the solar market downturn (impacting our high temperature product range which had seen significant growth) and the slowing down of the Chinese economy (impacting our Chinese auto-consumer and wind businesses). As the business enters the second quarter there are signs of the Chinese market beginning to improve, although a near term pick up in the solar market is not envisaged. Counter to these we have seen solid performance in our traditional product base in the Western World with revenue above 2011 levels and expected to continue to grow as we progress through the year.
As anticipated NP Aerospace is trading below 2011 levels. With existing UK MoD vehicle programmes being completed in the first half of this year the business is actively pursuing new opportunities both in the UK and overseas with our efforts in the US in particular yielding strengthening relationships with major vehicle OEMs.
MMS revenue to April was comfortably above the comparable period last year. Growth in the Western World and India was strong although this was offset in part by the impact of the slowing of the Chinese economy. With order books strong, the outlook for the full year remains positive with growth anticipated over 2011.
There have been no material changes to the financial position of the Group in the first four months of 2012. There have been two cash transactions that were outflows in the first four months, firstly the penultimate 10% payment for NP Aerospace was paid in March, at £6.7 million, taking the holding in this business to 90% and secondly the vesting of long term incentive plans’ in February and March when the Employee Benefit Trust purchased £6.7 million worth of shares for the awards to employees. Otherwise the net debt profile of the Group continues to improve for the full year as expected.
The net restructuring and one-off costs for 2012 remain, as expected, at c£4 million.
For further enquiries:
|Mark Robertshaw||Morgan Crucible||01753 837000|
|Kevin Dangerfield||Morgan Crucible||01753 837000|
|Mike Smith/Will Carnwath||Brunswick||0207 404 5959|
This statement constitutes Morgan Crucible's Interim Management Statement for the period from 3rd January 2012 to 8th May 2012 as required by the UK Listing Authority's Disclosure and Transparency Rules.