Morgan Advanced Materials: Navigating Challenges in the Advanced Materials Sector

Highlights

• Morgan Advanced Materials plc (LON:MGAM) experienced a significant share price decline of over 16% on February 28, 2025, reaching a 52-week low of GBX 198.

• The company reported a 1.3% decrease in revenue for 2024, totaling £1.1 billion, but achieved a 6.7% increase in adjusted operating profit due to operational streamlining.

• Challenges include uncertain demand influenced by potential U.S. trade tariffs and a slowdown in the electric vehicle market, impacting the semiconductor sector.

Overview of the Advanced Materials Sector

The advanced materials sector encompasses companies specializing in the development and production of high-performance materials that offer superior properties compared to traditional materials. These materials are integral to various industries, including aerospace, automotive, electronics, and energy, due to their enhanced strength, durability, and efficiency.

Company Profile: Morgan Advanced Materials

Morgan Advanced Materials plc, listed on the London Stock Exchange under the ticker LON:MGAM, is a prominent entity within the advanced materials sector. The company focuses on creating specialized products for industries such as semiconductor manufacturing, energy, healthcare, and transportation. Their product portfolio includes components designed to withstand extreme conditions, contributing to improved performance and efficiency in customer applications.

Recent Stock Performance

On February 28, 2025, Morgan Advanced Materials' share price experienced a notable decline of over 16%, reaching a 52-week low of GBX 198, before closing at GBX 214.51. This sharp decrease was accompanied by a significant increase in trading volume, with approximately 8.7 million shares changing hands, surpassing the average daily volume of 1.6 million shares.

Financial Performance in 2024

In the fiscal year 2024, Morgan Advanced Materials reported a 1.3% decrease in revenue, totaling £1.1 billion. Despite this, the company achieved a 6.7% increase in adjusted operating profit, attributed to efforts in streamlining operations and enhancing efficiency.

Challenges Impacting the Company

Several factors have contributed to the recent challenges faced by Morgan Advanced Materials:

• Trade Tariff Uncertainties: The company's operations span multiple countries, including the United States, Mexico, Canada, and China. Potential U.S. trade tariffs on imports from these regions have introduced uncertainty, prompting the company to consider relocating manufacturing plants to mitigate potential impacts.

• Semiconductor Sector Slowdown: A decrease in demand for silicon carbide power semiconductor products has been observed, primarily due to a weakening electric vehicle market. This slowdown has affected the company's revenue streams within the semiconductor sector.

Strategic Initiatives and Outlook

In response to these challenges, Morgan Advanced Materials has undertaken several strategic initiatives:

• Operational Efficiency: The company has consolidated manufacturing plants and streamlined reporting segments to enhance operational efficiency and reduce costs. These measures have contributed to improved profitability despite revenue declines.

• Market Diversification: Efforts to diversify product offerings and target markets beyond the semiconductor sector are underway. By expanding into other industries, the company aims to reduce dependency on any single market and stabilize revenue streams.

• Supply Chain Adaptation: To address potential trade tariff impacts, Morgan Advanced Materials is exploring alternative manufacturing locations and supply chain adjustments. These proactive measures are intended to maintain competitiveness and mitigate risks associated with geopolitical uncertainties.