Slow down in automotive sector takes its toll on polymer specialist
Victrex, which makes world-leading polymers for the car and aerospace industries, said it has seen a weaker start to its 2019 financial year in a trading update ahead of its annual general meeting today.
The firm, based in Thornton Cleveleys, in Lancashire, said that, with expected end-market headwinds, tougher comparatives, some de-stocking and adverse currency, overall first quarter revenue of £64.1m was 18% down on the prior year (Q1 2018: £78.7m), with group sales volume of 822 tonnes being 22% down on the prior year (Q1 2018: 1,051 tonnes).
Excluding volumes for the large consumer electronics contract, core business volumes were down approximately 13% during the first quarter.
Quarter one headwinds were predominantly in automotive and consumer electronics markets, principally the ongoing slowdown in automotive and the associated impact on value added resellers, which sees volumes indirectly supplied to automotive.
As expected, the first quarter also saw no volumes supplied for the large consumer electronics contract, versus a strong comparative last year.
However, the company said: “Pleasingly, January and February saw an improvement, with a notable pick-up in automotive sales.”
It said the company retains a highly cash generative business model, with no change to its financial position since September 30, 2018.
Currency, raw material and energy cost inflation remain modest headwinds for 2019, although these will fall predominantly in the first half.
Chief executive, Jakob Sigurdsson, said: “Although Q1 is always the seasonally weakest quarter for Victrex, this quarter has been slightly weaker than anticipated, driven principally by the slowdown in automotive, the associated impact on value added resellers, and some de-stocking.
“Q1 also saw expected headwinds in consumer electronics, together with strong comparatives and adverse currency.
“Pleasingly, January and February saw some initial improvement, although given our Q1 performance, the first half is expected to be much weaker overall, compared to the prior year.
“Our expectations for the second half are unchanged, with new projects and reduced headwinds supporting our assumptions.
“With strong structural growth opportunities, a healthy new product pipeline and a highly cash generative business model, we continue to be well-placed for the medium and long term.”
Victrex is an innovative world leader in high performance polymer solutions, focused on the strategic markets of automotive, aerospace, energy electronics and medical.
