Morgan Advanced Materials (MGAM) H1 2025 earnings summary

Executive summary

• Revenue declined 5.8% year-on-year at constant currency, reflecting ongoing end-market weakness, especially in semiconductors, with some signs of stabilization.

• Adjusted operating margin was 11.1%, down from 12.5% last year, supported by pricing, cost controls, and simplification initiatives.

• Business simplification programme is on track, expected to deliver £24m in annualised savings in 2025 and £27m in 2026, with a total cost of £45m.

• Semiconductor investment is largely complete, with flexibility to expand capacity as demand recovers.

• CEO transition completed smoothly, with a focus on operational excellence and simplification.

Financial highlights

• Revenue for H1 2025 was £522.6m, down 5.8% organically year-on-year.

• Adjusted operating profit was £58.0m, with adjusted EPS at 10.8p and interim dividend held at 5.4p.

• Free cash flow was an inflow of £1.2m, improved from a £7.9m outflow last year.

• Return on invested capital was 16.2%, down from 19.7% year-over-year.

• Net debt at period end was £249.1m, or 1.7x EBITDA.

Outlook and guidance

• Full-year organic constant currency revenue expected to decline mid-single digits, with no recovery assumed in H2.

• Profitability expected at the bottom end of consensus, impacted by weak markets, mix, and FX headwinds.

• Free cash flow expected to normalize in H2 as CapEx and simplification costs tail off.

• Leverage (net debt/EBITDA) targeted to return to 1.5x by year-end.

• One-off startup costs of £7m expected in 2026 for new semiconductor capacity.