Morgan Crucible Sees Improving Conditions in First Quarter of 2010
The Morgan Crucible Co. plc recently held its annual general meeting and issued its interim management statement regarding trading and financial performance for the first quarter of 2010, as well as its outlook for the full year. According to Morgan Crucible, the group has had an encouraging start to 2010. Overall, it has seen trading conditions improve with steadily increasing levels of order intake since the fourth quarter of 2009. Demand in Asia is robust, improving in North America and stable in Europe.
Operating profits and margins are above the comparable period for 2009 and in line with management’s expectations, benefiting from the positive impact of cost savings made in 2009. Morgan Crucible continues to manage its cost base carefully so that the business will benefit fully from any operational leverage as revenues continue to recover.
“Whilst recognizing that it is still early in the year, I am encouraged by the group's trading so far in 2010,” said Mark Robertshaw, CEO. “There are signs of end-market demand improving in Asia and in North America, with Europe showing stability. With the benefits of the cost reductions made last year coming through, we believe that Morgan Crucible is well placed to capitalize on market opportunities going forward.'”
In the first three months of 2010, the Carbon businesses, excluding NP Aerospace, have achieved good revenue increases compared with both the comparative period in 2009 and the last three months of 2009. The group is seeing growth in all regions and across most product lines. The strongest revenue growth has been in China and, to a lesser extent, in the Americas, where Morgan Crucible is benefiting from an improvement in the electrical and seal and bearing businesses. Europe is showing some revenue improvement but not to the same level as other regions.
The steady improvement in order intake is giving increased confidence in the sustainability of this recovery across the breadth of the group’s end markets. As expected and previously advised, while revenues in NP Aerospace are below those achieved in 2009, they remain in line with expectations. Morgan Crucible has continued to expand its activities in the renewable energy sectors, and the group remains optimistic that its initiatives in solar, wind and energy storage hold promise for future growth.
The opening quarter of 2010 has seen the majority of the Technical Ceramics division's markets continue to improve, with order books increasing steadily. Of particular note is the performance of the North American markets, where there has been a general pickup in demand for a wide range of applications, from aerospace to general industrial markets. However, the group has seen some weakness in the medical device markets, where there has been a level of destocking; the situation is expected to improve in the second half of the year.
The production ramp-up for the new range of Hard Disc Drive products is progressing to plan. The European market is still lagging the U.S., but there are improved levels of activity with new orders coming through, particularly in thermal processing applications. The Asian business, although smaller in scale, is reporting improved revenues from both the construction and solar power markets. Revenue for industrial gas turbine products remains weak across the globe, and the outlook in this market remains subdued. Work to consolidate the group’s California plants is proceeding to plan, and the anticipated benefits are coming through.
Since the beginning of the year, overall market conditions have improved for the Thermal Ceramics division, though the situation varies both by region and end market. While the order intake for industrial insulation applications in Europe has shown little progression, the markets of North America and Latin America are gradually improving, and the Asian businesses, in general, are achieving a clear strengthening of order volumes. More specifically, increasing revenue levels in India and China are encouraging.
In other sectors, the same variations are apparent; the building sector in Europe has been doubly hit by the economic downturn and harsh winter that halted many construction projects, while chemical and petroleum markets, which had remained robust throughout the recession period, are now seeing further order improvements, notably from the Latin American marketplace. In iron and steel, the emerging markets are exhibiting signs of a further period of expansion, though this sector remains subdued in mature western markets.
Additional details are available at www.morgancrucible.com.