Ceramic Industry

First Half 2008 Sales Up for Morgan Crucible (posted 8/15/08)

August 15, 2008

Morgan Crucible Co. plc recently released its interim results for the half-year ended July 4, 2008. Group revenue for the first half of 2008 was ₤401.2 million (~ $756.9 million), an increase of 15.4% compared to the first half of 2007. On an organic (i.e., excluding the acquisition of the Carpenter businesses) and constant currency basis, revenues grew by 4.9%.

Group underlying operating profit increased by 16.3% to ₤46.4 million (about $87.5 million), compared to ₤39.9 million (about $75.3 million) in the same period of 2007. Underlying operating profit margins for the six months were 11.6%, compared to 11.5% in the equivalent period in 2007 and 11.4% for the full year 2007.

First half 2008 revenues for the Technical Ceramics division were ₤98.3 million (about $185.5 million), and overall increase of 26.3% from ₤77.8 million (about $146.8 million) in the same period of 2007. This included ₤14.4 million (about $27.2 million) of revenue contributed by the businesses acquired from Carpenter during the half. At constant currency, organic revenue growth in Technical Ceramics, excluding the Carpenter businesses, was 4.0%.

In the U.S., demand was robust for aerospace applications in the company’s metals businesses, and for advanced medical components. In combination, these businesses offset some softness in more cyclical end-markets like consumer electronics. European and Asian regions performed well with particularly strong performance from the thermal processing business, driven in part by demand in the solar energy market. Profit margins in Europe made good progress during the half. The site in Eindhoven was successfully closed, with production consolidated into plants elsewhere in the region, and a number of labor-intensive operations were also successfully transferred to Eastern Europe during the first half of the year.

The Carpenter businesses, which Morgan Crucible acquired at the end of March, have made an excellent start with both revenues and profits ahead of expectations, as well as a healthy order book going into the second half. Across the Technical Ceramics division overall, order books are comfortably ahead of the same point last year. Of particular note is that the company expects to see the hard disk drive business return to volume during 2009.

Revenues within the Insulating Ceramics division, which includes the Thermal Ceramics and Molten Metal Systems business units, were up by 15.6% at ₤184.8 million (about $348.7 million) vs. ₤159.8 million (about $301.5 million) in the first half of 2007. On a constant currency basis, revenues increased by 7.1%.

The Thermal Ceramics business has maintained good top-line revenue growth on the back of continued buoyancy in the Asian, Middle Eastern, Russian and Latin American markets, driven predominantly by the energy, metals, and chemical and processing sectors. The order book overall, and particularly in these areas, remains high. Although the more mature markets of North America and Western Europe are showing less growth, the pressure of high energy, oil and raw material prices is stimulating demand on industry to upgrade existing facilities, thus offering Thermal Ceramics increased opportunities to provide enhanced insulation applications.

Additional details are available at www.morgancrucible.com.

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