Morgan Advanced sees FY operating profit at bottom end of consensus range

Morgan Advanced Materials warned on Thursday that full-year adjusted operating profit was set to be around the bottom of the consensus range due to weak market conditions, mix effects and foreign exchange headwinds.

In results for the six months to 30 June, the company said adjusted operating profit declined to £58m from £71.3m in the same period a year earlier, with revenue down 8.7% to £522.6m.

Morgan Advanced said market conditions remained challenging in the first six months of the year. In industrial markets, it has continued to see lower order levels in Europe and China and a slowing of growth in the USA.

In the group’s faster growing markets, growth in semiconductor markets has been "heavily impacted" by stocking in customer supply chains and slower-than-expected growth in global sales of electric vehicles.

The group now expects adjusted operating profit to be around the bottom of the consensus range of £126.3m to £115.6m.

Full-year revenue guidance was left unchanged, with organic constant currency revenue expected to decline by a mid single-digit percentage level. This assumes the market stabilisation seen in the first half of this year continues, but with no expectation of recovery in the second half, the company said.

Chief executive Damien Caby said: "During the first half of this year, the business has delivered a resilient performance against a backdrop of challenging markets. We remain mindful of the macroeconomic environment, but we continue to believe the business is well placed to navigate through this period of global uncertainty.

"We are continuing to execute on the strategy. I am pleased to report that we have now substantially completed our semiconductor capital investment and we continue to make good progress across our business simplification initiatives. These measures will ensure we are well placed to benefit from rapid margin expansion as markets recover."