Victrex PLC on Thursday warned that soft trading at its Chemicals business means reaching second half profit targets will be ‘challenging’, despite a pick-up in some other end markets.
In a trading update for the financial third quarter to June 30, the Lancashire-based supplier of high performance polymers said full-year volume guidance is unchanged and it continues to expect low to mid single digit volume growth.
But at a profit level, destocking in Medical and ongoing lower asset utilisation continue to be headwinds, with currency rates starting to move adversely in the second half.
‘Unless Medical improves above current run-rates, the opportunity to deliver a slightly better [pretax profit] performance in the second half versus H2 2023 - in line with our previous guidance - will be challenging,’ the company said.
Chief Executive Jakob Sigurdsson noted continued momentum in some end markets but cautioned that Medical performance is tracking lower than expectations for the second half year.
Looking ahead he was more optimistic.
‘The recent signs of improvement in several end-markets make growth prospects more encouraging as we move towards [financial 2025]. Victrex has a diversified core business, increasing commercialisation in our mega-programmes, well invested assets, enhanced capability in our global team and the opportunity for substantial cashflow improvement. Overall, we have confidence in our medium to long-term prospects.’
Victrex said third quarter revenue was up 2% at £74.0 million from £72.2 million a year prior. Group volume jumped 20% to 979 tonnes from 818 tonnes, the firm added.
Victrex left guidance on full year capital expenditure and inventory unchanged. It anticipates capital expenditure will be lower in the second half, compared to the first. This means full year capital expenditure will be around £35 million. Inventory is tracking to reduce in line with guidance.
Shares in Victrex recovered early falls to trade 1.4% higher at 1,166.00 pence in London on Thursday morning.
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