Victrex Q3 Interim Management StatementSource: RNS
7 July 2022
Victrex plc - Q3 Interim Management Statement
Continuing strong growth, revenue up 16% & volume up 10% with improved pricing
A record quarter - on track for full year expectations
Victrex plc is an innovative world leader in high performance polymer solutions, delivering sustainable products which support CO2 reduction and bring environmental and societal benefit in multiple end-markets. Today's Interim Management Statement for Q3 covers the period 1 April 2022 to 30 June 2022.
Overall, the Group is seeing continuing strong growth across the majority of its end markets, including a record quarterly volume during Q3 to reflect a healthy core business, and good progress on milestones within its 'mega-programme' growth pipeline:
· Q3 Group revenue was up 16% to £93.4m (Q3 2021: £80.7m)
· Q3 Group volume was up 10% to 1,323 tonnes (Q3 2021: 1,202 tonnes)
· Year to date Group revenue of £253.5m is 9% ahead of the prior year (2021 YTD: £231.6m), with YTD Group volume of 3,586 tonnes being 9% ahead of the prior year (2021 YTD: 3,289 tonnes)
· Q3 benefiting from price increases, with improved average selling prices (ASP), to help offset unprecedented energy and raw material costs - mindful of ongoing inflationary environment
· Strong progress on PEEK Knee clinical trial, with 22 patient implants and 6 patients passing the 12-month stage with no intervention. Closing in on a partner agreement with a top 5 Knee company
· 510k regulatory approval in the US for a Trauma plate based on our PEEK composite materials, as part of our partnership with In2Bones
· Advanced discussions for partnership in Trauma, to support further scale up and commercialisation
· Partnering with Jaguar Land Rover (JLR), industry players and academia on Project Virbius (E-mobility) to build on recent new business wins
End market performance
Across our end-markets, Value Added Resellers (VAR), Electronics and Energy & Industrial continue to be the main growth drivers, with double-digit improvement. Growth was held back by Automotive, where performance continues to be variable, reflecting the ongoing semiconductor chip shortages in this industry. In Aerospace, build rate increases from the major manufacturers towards the end of 2022 should support continued recovery.
In Medical, despite a temporary headwind from COVID-19 lockdowns in China during the earlier part of Q3, we saw solid growth, with performance being broad based across Asia-Pacific and the US. We also secured our first regulatory clearance in China for PEEK-OPTIMA™ HA Enhanced (Spine) to support commercialisation.
Inflation recovery & pricing
Pricing improved across end markets compared to Q2, with the blended average selling price (ASP) also being ahead of the previous quarter and the prior year.
Victrex retains a highly cash generative business model, with our cash position supporting the elevated capital expenditure this year, principally in our China manufacturing investments, with our new PEEK polymer facility set to start commissioning during the final quarter. Cash on 30 June 2022 was £50m, which excludes £3.6m cash ringfenced in China investments. Capital expenditure for the year is now expected to be slightly lower than our prior guidance, at approximately £50m, reflecting some expenditure phased into FY 2023.
Jakob Sigurdsson, Chief Executive of Victrex, said: "This is another strong performance by Victrex, with a healthy core business, good growth in new applications and further milestones in our mega-programmes, particularly in Medical as we look for this business to become a larger part of our long-term revenues. Despite our sales mix, where VAR, Electronics and Energy & Industrial drove most of the volume growth, we are starting to see the benefit of price increases to help recover the unprecedented increase in energy and raw material costs.
"Although historic run-rates typically see a slight step down during our final quarter, our order book is robust and, overall, this is expected to be a year of record volumes for Victrex. Whilst we are mindful of uncertainty in the global economic outlook, we remain on track for delivering full year expectations.
"With sustainable products bringing environmental and societal benefits, a balanced portfolio of end markets in our core business, a strong pipeline of growth opportunities, and a highly cash generative business model, our Polymer & Parts strategy keeps us well positioned for the medium to long-term."
Victrex will report its Preliminary Results for 2022 on Tuesday 6th December 2022.
Analyst & investor conference call
A conference call with management will take place this morning, Thursday 7th July, at 0830am BST, which can be accessed by registering at the following link:
Andrew Hanson, Director of Investor Relations, Corporate Communications & ESG +44 (0) 7809 595831
Jakob Sigurdsson, Chief Executive +44 (0) 1253 897700
Ian Melling, Chief Financial Officer +44 (0) 1253 897700
Victrex is an innovative world leader in high performance polymer solutions, focused on the strategic markets of Automotive, Aerospace, Energy & Industrial, Electronics and Medical. Every day, millions of people rely on products or applications which contain our sustainable materials, from smartphones, aeroplanes and cars to oil & gas operations and medical devices. With over 40 years' experience, we are moving beyond the polymer into semi-finished and finished products which shape future performance for our customers and our markets, provide environmental and societal benefit for customers and drive value for our shareholders. Find out more at www.victrexplc.com