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On August 6, 2024, Morgan Advanced Materials PLC (LSE:MGAM) announced an increase in its pretax profit for the first half of the fiscal year. The company's pretax profit doubled to £57.5 million, up from £28.4 million in the previous year.
Revenue and Dividend Increase
Revenue for the first half of the year rose by 3.4%, reaching £572.6 million compared to £553.9 million. In light of the improved financial results, Morgan Advanced Materials has raised its interim dividend by 1.9%, increasing it to 5.4 pence per share from 5.3 pence. This dividend increase underscores the company's commitment to delivering value to its shareholders.
Cost and Debt Overview
Operating costs before amortization and impairments decreased by 2.4%, falling to £504.7 million from £517.3 million. However, net debt increased by 5.0%, reaching £270.5 million compared to £257.7 million. The rise in net debt is partly attributed to the company’s investment activities and restructuring efforts.
CEO's Remarks
Chief Executive Officer Pete Raby highlighted the company’s successful implementation of its strategic initiatives. He noted that while constant currency revenue growth benefited from the prior year's weaker performance due to cyber impacts, there was underlying revenue growth in both core and faster-growing markets. Raby emphasized that the company’s investment in semiconductor capacity and its simplification programme are on track, which should contribute to future growth.
Restructuring and Simplification
Morgan Advanced Materials has initiated a simplification programme, streamlining its operations into three segments: Thermal Products, Performance Carbon, and Technical Ceramics. This restructuring plan is aimed at delivering annualized cost savings of £10 million by 2025, with an expected implementation cost of approximately £20 million.
Future Outlook
Looking ahead, Morgan Advanced Materials anticipates that revenue growth in the second half of the year will be consistent with the first half. The company projects full-year revenue growth at constant currency to be at the top end of its financial framework, ranging from 4% to 7%, an increase from the 2.5% reported in 2023. Margins are expected to remain around 13%.
