Morgan Advanced Materials (LON: MGAM) is the biggest faller in the FTSE 250 index despite reporting an improved full year profit. However, demand is uncertain particularly in semiconductors where clients are overstocked. The share price slumped 17.6% to 211p.
Morgan Advanced Materials produces a wide range of carbon and ceramic materials for sectors including electronics, healthcare, transport, energy and industrial.
In 2024, revenues were flat at £1.1bn, although there was growth in constant currency terms, but cost savings helped margins improve and pre-tax profit rise from £102.9m to £107.7m. The dividend was edged up from 12p/share to 12.2p/share.
There was a decline in revenues in the thermal products division, but profit contribution was maintained. The performance carbon and technical ceramics both improved revenues and profit.
Capital investment in semiconductor capacity is being scaled back because of slower growth in battery electric vehicles. The investment has been reduced from £100m to £60m. This capacity will generate revenues of £40m, which is 50% of the previous intention.
Annual savings of £27m will be achieved by 2026. These the majority of these cost savings initiatives will come through in 2025 and this should enable margins to rise from 11.7% to 12.5% in 2025. That will offset a likely decline in revenues this year.
Morgan Advanced Materials is continuing its share buyback programme. It has already bought back £10m worth of shares and another £10m will be spent. The company has permission to spend up to £40m in total.