Victrex plc (LON:VCT), an innovative world leader in high performance polymer solutions, today announced a market update covering trading, its financial position and proactive actions on COVID-19.
H1 trading
Trading for the first half year has been solid and in line with expectations:
· Solid volume growth, including a strong finish in March
· Good growth in Automotive and Medical, with a stable performance in Aerospace, Electronics and Value-Added Resellers, offset by weakness in Energy
· H1 2020 inventory c£100m, with high sales stock across US, Europe and Asia; appropriate raw material inventory in the UK and supply chain functioning well
Strong financial position
Victrex is part of multiple supply chains, many of which are supporting critical applications, for example in Medical. The Group retains a strong balance sheet to maintain customer, supplier and investor confidence and to ensure it has sufficient resources to invest and underpin future growth:
· The Group has facilities of £40m, comprising a committed and undrawn RCF of £20m and a £20m accordion, to October 2024
· Net cash position on 31 March of £42.2m, after payment of FY19 final dividend in February
Whilst Victrex benefits from a net cash position, we are acutely aware of the near-term uncertainty at a macro and end-market level, and have prudently implemented appropriate measures to reduce cost and conserve cash, whilst maintaining strong service levels for customers:
· Capital expenditure for UK debottlenecking programme now deferred to FY 2021
· Other capital programmes limited to essential only expenditure
· Operating cost items being limited to prioritise and support customer related activity
· China capacity investment continuing on plan
Other cash conservation measures will remain under review, which could include future shareholder dividends.
Proactive actions on COVID-19
The safety and well-being of Victrex employees continues to be our highest priority. We established a COVID-19 committee at the start of 2020, with a proactive approach and a range of contingency plans already implemented:
· People: we continue to follow governmental or state guidance wherever we operate
· Customers: we continue to serve customers from home offices, with all of our global employees’ homeworking, wherever roles are not production related
· Essential industry: the UK government defines Chemicals as an essential industry with essential workers, with Victrex also having a long-standing history in supporting many critical and “life-sustaining” applications, particularly in Medical
o UK operations: reflecting government guidance and requirements in many “life-sustaining” applications, we are continuing to produce aligned to demand, supplemented by high buffer inventory if required
o US operations: we continue to operate on an ongoing modified basis, defined as being a ‘life-sustaining’ organisation in several states
· Ventilators: in addition to companies we already serve, we are supplying materials for Ventilators or related equipment to a number of global companies
Outlook
Although trading has remained in line with expectations year-to-date and the third quarter has shown early signs of a solid start, including some normal demand returning across parts of Asia, the macro-economic and end-market outlook over the coming months is very uncertain, particularly for Europe and the US.
It is therefore too early to provide guidance for the remainder of the current financial year. We will continue to produce for essential business, monitoring appropriate guidelines and assessing other cash conservation measures as required.
Victrex will report its interim results on 11 May 2020.
