Morgan Advanced Ceramics Revenue Up Slightly for 2016 First Half
Morgan Advanced Ceramics recently reported financial results for the first half of 2016.
Morgan Advanced Ceramics recently reported financial results for the first half of 2016. Financial performance was in line with management expectations. Group revenue was £475.4 million (approximately $628.1 million), up 1.3% on a reported basis and down 2.4% on a constant currency basis, compared to £469.2 million (~ $620 million) in the first half of 2015. As anticipated, trading conditions stabilized in the first half of the year and have been similar to the second half of last year. Implementation of the new strategy announced in February is on track, with the move to the new global organization complete.
Group underlying operating profit margin for the first half of the year was 11.6%, compared to 13% last year, reflecting volume deleverage on weaker underlying revenue. Overall order intake in the first half was steady, with a book-to-bill ratio of 1.01 times. Underlying EPS was lower at 10.5 pence (~ $.14), compared to 12.6 pence (~ $.17) during the same period last year. Net debt at the half-year was £241.6 million (~ $319.2 million), while at the end of the full-year 2015 it was £216 million (~ $285.4 million).
In Thermal Products, reported revenue was up 3.8% compared to the first half of 2015, at £214.5 million (~ $283.4 million). At constant currency, the increase was 0.4% compared to the first half of 2015. The Thermal Ceramics business saw growth in Asia and Europe, partially offset by declines in North America. Earnings before interest, taxes, and amortization (EBITA) for the first half of the year was £28.5 million (~ $37.7 million), with EBITA margin declining to 13.3% in the first half of 2016 compared with 14.1% in H1 2015.
Thermal Ceramics achieved 0.6% revenue growth at constant currency in the first half, with strong growth in Asia, driven in particular by Japan. In Europe, growth was driven by applications in consumer products and medical, as well as projects in iron and steel and ceramics. In North America, activity levels were significantly lower in most industrial markets, reflecting a continuation of the slowdown in activity that began in the second half of 2015.
Molten Metal Systems saw a 1.4% constant currency decline in the first half, with weaker activity in its non-ferrous metals end markets. EBITA margins improved due to the benefits of productivity enhancements.
In Carbon and Technical Ceramics, reported revenue was marginally down 0.4% against the first half of 2015 at £245 million (~ $323.7 million). On a constant currency basis, revenue was down 4.5% compared to the first half of 2015 with declines across all the businesses. EBITA for the first half of the year was £29.7 million (~ $39.2 million), with EBITA margin declining to 12.1% in the first half of 2016 compared to 13.8% in the first half of 2015 as a result of the lower activity levels.
Electrical Carbon saw a constant currency decline in revenue of 6% in the first half, with declines in North America and in Asia on weaker traction, mining and industrial demand, again reflecting a continuation of the slowdown experienced in the second half of 2015. For Seals and Bearings, the constant currency decline in revenue was 4.4% in the first half due to a weaker oil and gas market. Within Technical Ceramics, the 3.6% constant currency decline in revenue was primarily due to lower sales of electroceramic components, with product sales for hard disc drive applications reducing as expected. Across each of the businesses, EBITA margins declined as a result of the lower activity levels.
Revenue for the first half of the year was £15.9 million (~ $21 million), representing a decrease of 4.2% at both reported and constant currency rates. EBITA for the first half of the year was £1.1 million (~ $1.5 million), with EBITA margin improving to 6.9% in the first half of 2016 compared with 2.4% in the same period last year. The EBITA progression reflects the mix of contracts delivered in the first half, as well as the benefits from efficiency improvements
“As anticipated, trading conditions in the first half of the year have been similar to the second half of last year in many of our markets,” said Pete Raby, CEO. “Against this backdrop, we have delivered a solid set of results for the first half of the year, in line with the expectations set in November of last year. The implementation of our strategy is on track, with a new organization structure in place, plans for our two new technology Centres of Excellence defined and operational improvements underway across the group.
“Looking to the balance of the year, we continue to remain cautious in terms of market outlook and are expecting underlying trading levels to be similar to that achieved in the first half and our guidance for underlying trading for the full year remains unchanged. We have planned prudently for this year and will be focused on the execution of our strategy, improving our efficiency and investing in the business to drive future growth.”
For more information, visit www.morganadvancedmaterials.com.