Victrex (VCT) H2 2024 earnings summary

Executive summary

• FY 2024 volumes increased 4%, with the first 1,000-ton quarter in two years, but revenue declined 5% year-over-year to £291 million due to medical destocking and FX impacts.

• Profitability was significantly impacted by lower asset utilization and medical destocking, leading to a 26% drop in underlying PBT (£59.1m) and a 68% fall in reported PBT (£23.4m) due to £35.7m in exceptional items.

• Strong cash conversion at 114% and inventory unwind in line with targets; CapEx is set to decrease after a major investment phase, with RCF repaid.

• Dividend maintained at 59.56p per share for the year, with final dividend flat at 46.14p.

• Investment phase concluded, shifting focus to growth, margin improvement, and cash generation.

Financial highlights

• Full-year revenue: £291 million, down 5% (2% in constant currency); gross margin dropped to 46.2% from 53.0% (-680bps).

• Underlying PBT: £59.1 million, down 26%; reported PBT: £23.4 million, down 68% due to £35.7 million in exceptional items.

• EBITDA was £83.6m (vs £102.3m prior year); free cash flow improved to £51.4m (vs £3.2m prior year).

• Net debt: £21.1 million; cash and equivalents: £29.3 million.

• Underlying EPS was 51.7p (down 33%); reported EPS 19.8p (down 72%).

Outlook and guidance

• FY 2025 guidance targets at least mid-single-digit volume growth, with PBT growth expected to outpace volumes and gross margin recovery to around 50%.

• Gross margin targeted to improve to around 50% in FY 2025, supported by better asset utilization and lower raw material costs.

• ASP guidance for FY 2025: £75–£80/kg.

• Medical recovery anticipated in the second half of FY 2025; sustainable solutions and mega-programmes to drive early growth.

• FX headwind of £7–8 million expected in FY 2025; inventory targeted to reduce to ~£100m by year-end.