Victrex Plc · LSE:VCT
Victrex — FY2024 Earnings Presentation
38 slides from Victrex's earnings presentation, Dec 3, 2024
Slide 1: Enabling Environmental & Societal Benefits
VICTREX PLC PRELIMINARY RESULTS 3 DECEMBER 2024 ENABLING ENVIRONMENTAL & SOCIETAL BENEFITS OUR PURPOSE: BRINGING TRANSFORMATIONAL & SUSTAINABLE SOLUTIONS THAT ADDRESS WORLD MATERIAL CHALLENGES EVERY DAY
Slide 2: Victrex Team
VICTREX TEAM VICTREX PLC PRELIMINARY RESULTS 3 DECEMBER 2024 Jakob Sigurdsson Chief Executive Officer Ian Melling Chief Financial Officer 2
Slide 3: FY 2024 Summary
FY 2024 SUMMARY VOLUME IMPROVEMENT PBT IMPACTED BY MEDICAL & IMPROVING FINANCIAL (A TALE OF TWO HALVES) ASSET UTILISATION POSITION 1. FY volumes +4% 1. Underlying PBT £59.1m 1. Strong cash conversion of 114% 2. First 1,000 tonne quarter since FY22 2. Gross margin lower on asset 2. Lower capex & inve
Slide 4: Key Messages
KEY MESSAGES CASH GENERATION INVESTMENT PHASE COMPLETE INVENTORY UNWIND ON TRACK MARGIN IMPROVEMENT GROWTH & MARGIN IMPROVING ASSET UTILISATION IMPROVING CASH CONVERSION RETURNING INPUT COSTS TO GROWTH CHINA RAMP-UP DRIVEN BY DEMAND NORMALISATION MEDICAL MIX (CORE & MEDICAL) ALIGNED TO MEGATRENDS ME
Slide 5: FY 2025 Growth Supported by Improving Run-Rates
FY 2025 GROWTH SUPPORTED BY IMPROVING RUN-RATES QUARTERLY RUN-RATES FY 2023-FY 2024 1200 1015 986 979 1000 839 800 751 Tonnes 600 400 200 0 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 Q1 FY25 OPPORTUNITY FOR AT LEAST MID-SINGLE DIGIT VOLUME GROWTH 5 CONFIDENTIAL
Slide 6: Financial Update
FINANCIAL UPDATE Ian Melling Chief Financial Officer 6
Slide 7: Income Statement
Year ended 30 September INCOME STATEMENT 2024 2023 Change Change (constant currency)1 £m £m % % Revenue 291.0 307.0 -5% -2% Gains/(losses) on foreign currency net hedging* 5.2 (7.6) -168% Gross profit 134.3 162.6 -17% -18% Gross margin % 46.2% 53.0% -680bps FX hedge-adjusted gross margin % 1 45.3% 5
Slide 8: Underlying PBT Bridge
UNDERLYING PBT BRIDGE FY23 to FY24 PBT bridge (£m) Underlying PBT £m *The comparative period - FY 2023 - benefited from the sale of inventory produced at higher volumes in FY 2022 (at lower manufacturing cost), prior to the peak energy & raw material price levels seen during FY 2023. MEDICAL & LOWER
Slide 9: ASP & Margin
ROBUST ASP AFTER SOFTER MIX & FX ASP & MARGIN • FY 2024 ASP £78/kg (FY 2023: £85/kg reflecting record Medical performance) • FY 2024 ASP down 5% in constant currency1 due to mix GROSS MARGIN LOWER ON ASSET UTILISATION • FY 2024 gross margin 46.2% (impact of lower asset utilisation & softer mix) £/kg
Slide 10: Gross Margin Bridge
GROSS MARGIN BRIDGE FY 2024 vs FY 2023 KEY DRIVERS ON GROSS MARGIN IMPROVEMENT IN FY 2025 • IMPROVED ASSET UTILISATION • CHINA RAMP-UP • RAW MATERIALS / COST OF • SALES MIX • CURRENCY MANUFACTURE Gross margin % *The comparative period - FY 2023 - benefited from the sale of inventory produced at high
Slide 11: Future Growth Aspirations
FUTURE GROWTH ASPIRATIONS RETURNING OUR GROSS MARGIN TO MID-HIGH 50s FY 2024 FY 2025 MID-TERM (FY2027-28) GM 46.2% GM ~50% GM mid-high 50s Lower asset utilisation Improved asset utilisation (UK) Further improved asset utilisation Cost impact from inventory Greater % Medical mix & operating leverage
Slide 12: Currency
CURRENCY Increased currency headwind for FY 2025 2023 2024 Before impact Currency Constant Before impact Reported As reported of hedging Spot Impact currency 1 of hedging £m £m £m £m £m £m Revenue 307.0 307.0 (10.9) 296.1 291.0 291.0 (Loss)/gain on foreign currency net hedging (7.6) - - - 5.2 - Gros
Slide 13: Cash
CASH FY2024 FY2023 CASH £m £m Operating profit before exceptionals 60.3 80.7 Depreciation, amortisation and loss on disposal 23.3 21.6 EBITDA Change in working capital 83.6 17.5 102.3 (48.9) Strong cash conversion (Underlying OCC 114%) Capital expenditure (32.6) (38.5) Operating cash flow 68.5 14.9
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE Major investment phase concluded Capex £m FY24 50 £32.6m 40 CAPITAL ALLOCATION PRIORITIES 30 20 10 0 FY20 FY21 FY22 FY23 FY24 CAPITAL INVESTMENT FY20-24 WELL INVESTED ASSETS (UK & CHINA) CASHFLOW IMPROVEMENT SUPPORTS SHAREHOLDER RETURNS 14
Slide 15: China (Victrex Panjin)
CHINA (Victrex Panjin) “China for China” • Commercially operational; ramp-up in FY 2025 (<150t) • : ‘E ’ EEK • Strategic long-term asset: focused on domestic China region 15 CONFIDENTIAL
Slide 16: FY 2025 Guidance Summary
UNDERPINNING OUR GROWTH EXPECTATIONS FY 2025 GUIDANCE SUMMARY VOLUMES COGS OPEX IMPROVED FY24 EXIT RATE SUPPORTS IMPROVING ASSET UTILISATION & STRONG COST CONTROL & FY25 GROWTH OPPORTUNITY COST OF MANUFACTURE MODEST INCREMENTAL INNOVATION • FY24 exit rate ~1,000t / quarter • Planning for higher prod
Slide 17: Performance Update
PERFORMANCE UPDATE Jakob Sigurdsson Chief Executive Officer 17
Slide 18: Sustainable Solutions Update
SUSTAINABLE SOLUTIONS UPDATE AUTOMOTIVE: SOLID PROGRESS DESPITE H2 HEADWINDS • FY 2024 Automotive volumes +5%; application growth & restocking • E-mobility: slightly softer performance; industry adoption continues AEROSPACE: CONTINUED STRONG GROWTH & COMPOSITES PROGRESS • FY 2024 Aerospace volumes +
Slide 19: Medical Update
MEDICAL UPDATE CONTINUED DESTOCKING: FOCUSED ON IMPROVEMENT IN FY 2025 • Medical revenue down 19% at £53.0m (flat H2 vs H1) • Destocking impact, despite procedure growth • Further growth in bespoke applications (CMF +7%, now >40% of non-Spine revenues) • Strong pipeline & broader portfolio (60% of r
Slide 20: Global Medical Outlook
GLOBAL MEDICAL OUTLOOK PEEK WELL POSITIONED RISK AVERSE MEDICAL REVENUE SPLIT FY14 FY24 REGULATORY REGIME SPINE 75% 40% NEXT REGION FOR KNEE NON-SPINE 25% 60% REGULATORY PATHWAY GEOGRAPHIC REVENUE 65/27/8 46/28/26 MIX * *US/Europe/Asia % of Medical revenues STRONG PROCEDURAL GROWTH ATTRACTIVE SPEED
Slide 21: Mega-Programme Step-Up in FY 2025
CURRENT MEGA- PROGRAMME REVENUES £10.2m (FY 2024) Magma: advanced qualification stage, supporting TechnipFMC/Petrobras E-mobility: new business Trauma: further revenue build wins for FY25 (800v with product portfolio platforms) Aerospace Composites: Knee: 1st commercial PEEK Closing on deployment fo
Slide 22: E-Mobility Update
BROADER EV APPLICATIONS E-MOBILITY UPDATE NEW BUSINESS & PLATFORM BUILD FOR FY25 (BASED ON VICTREX XPITM & 800v MOTORS) • 800v adoption increasing; faster charging & range (2029 IHS forecast 15m 800v motors vs 1.3m 2024) • Growing adoption for PEEK in 800v motors (~50% currently) • EV platforms in E
Slide 23: Trauma & Knee: Growing Commercial Pathway
VICTREX CONFIDENTIAL TRAUMA & KNEE: GROWING COMMERCIAL PATHWAY VICTREX TRAUMA PLATES VICTREX PROGRESS PROGRESS (China) (US) INCREASED JOINT REGULATORY PRODUCT NEW PARTNER DISCUSSIONS DEVELOPMENT REGULATORY APPROVAL & RANGE & AGREEMENT SUBMISSION COMMERCIAL GROWING GROWING PIPELINE & (JDA) SALES COMM
Slide 24: Self-Help: Project Vista
SELF-HELP: R& PROJECT VISTA PROGRAMME ARKET D& IN NO M TEA MS EFF TO VA S T EN SALE OPM L PIP ECT L EVE DE ELIN IV GO TI • Enhance profitability through how we Go to Market: D EED LIV ON IN NA SP E ER S BUS GIO ES E • Sales improvement & digital solutions RE Y • Business development, R&D and innovat
Slide 25: End Market Outlook
END MARKET OUTLOOK FY 2025* AEROSPACE OUTLOOK SUMMARY VAR - FOCUSED ON AT LEAST MID-SINGLE DIGIT VOLUME GROWTH - DRIVE PBT** GROWTH AHEAD OF VOLUME GROWTH ELECTRONICS - DEMAND & MEDICAL IMPROVEMENT A KEY FACTOR - FX HEADWIND ~£7-8M AT PBT MEDICAL KEY ENERGY & INDUSTRIAL OPTIMISTIC NEUTRAL AUTOMOTIVE
Slide 26: Summary & Investment Case
SUMMARY & INVESTMENT CASE Strong foundations, demand normalisation and alignment to global megatrends Self-help and mega-programme step-up Core & macro-normalisation, CURRENT MACRO-DRIVER MID-TERM LANDSCAPE CO2 reduction & POTENTIAL self-help and Up to 500kg/plane >5 tonnes/plane faster processing m
Slide 27: Appendix
= 4 0 ~Y “ APPENDIX
Slide 28: Group End Markets
GROUP END MARKETS FY 2024: 3,731 tonnes (+4% vs FY 2023) FY 2023: 3,598 tonnes (-24% vs FY 2022) Volume by Region Volume by Industry Medical* -15% Transport +8% Asia-Pacific +1% 1,057t 28% EMEA +8% VAR +14% 2,062t 55% 612t Electronics 17% -12% Americas -6% Energy & Industrial -6% * Medical volume re
Slide 29: Medical: Key Markets
MEDICAL: KEY MARKETS FY 2024: £53.0m (-19% vs FY 2023) FY 2023: £65.2m (+12% vs FY 2022) Revenue by Region Revenue by Market Asia-Pacific -27% £13.7m Non-Spine 26% -11% £24.6m Americas £21.4m 46% -18% 40% £31.6m 60% Spine -28% £14.7m EMEA 28% -10% 29 CONFIDENTIAL
Slide 30: Inventory
VICTREX CONFIDENTIAL INVENTORY Good progress on FY 2024 inventory unwind £115.1m 160 INVENTORY POSITION 140 Targeting ~£100m of inventory 120 • 100 by end of FY 2025 SUPPLY CHAIN CHALLENGES (COVID PERIOD) INVENTORY UNWIND • More diverse portfolio & regions ON TRACK 80 60 INVENTORY BUILD 40 (POST-COV
Slide 31: Increasing Mega-Programme Revenue
MAGMA E-MOBILITY TRAUMA KNEE AEROSPACE INCREASING COMPOSITES MEGA- REVENUE PROGRAMME FY 2024 MILESTONES FY 2025 FOCUS PROGRAMME MAGMA STATUS* Commercial c£1m • Supporting advanced qualification for Hybrid • Qualification finalised & approved bid (TFMC) MILESTONES Flexible Pipe (HFP) (Victrex, TFMC &
Slide 32: Mega-Programmes
MEGA- PROGRAMMES The pathway to Time to £10m revenue (indicative) £10m revenue KEY e-Motor £0m-£1m phase Trauma £1m-£10m phase Magma Aerospace Composites £10m+phase Knee FY 2024 FY 2027 FY 2030 32 FOCUSED MEGA-PROGRAMMES: POTENTIAL FOR EACH OF >£50m ANNUAL SALES IN PEAK YEAR CONFIDENTIAL
Slide 33: ESG Update
ESG UPDATE NET ZERO TARGET 2050* INTERIM TARGET 2032* • Scope 1 & 2 reduction of 50.4% • Scope 1, 2 & 3 reduction • Scope 3 reduction of 30% SBTI VALIDATION 100% RENEWABLE & 100% ELECTRICITY ACROSS ALL GLOBAL RENEWABLE LOCATIONS ELECTRICITY TARGET DELIVERED Further inspire our employees Decarbonisat
Slide 34: Business Unit Income Statements
BUSINESS UNIT INCOME STATEMENTS 2023 2024 Currency Constant Constant Reported Exc deals 1 As reported Exc Deals Spot Impact currency currency 1 £m £m £m £m £m £m £m Industrial Revenue 241.8 241.8 (8.6) 233.2 238.0 238.0 2% (Loss)/gain on foreign currency net hedging (5.4) - - - 4.1 - Gross profit 11
Slide 35: Balance Sheet
BALANCE SHEET FY 2024 FY 2023 £m £m PPE and intangible assets 369.2 369.9 Investment in associated undertakings - 9.1 Financial assets held at fair value through profit and loss 3.5 13.2 Financial assets held at amortised cost 1.0 0.6 Retirement benefit asset (net) 8.2 7.2 Inventories 115.1 134.5 Tr
Slide 36: Definitions
DEFINITIONS ALTERNATIVE PERFORMANCE MEASURES: 1) Constant currency metrics are reached by applying current year weighted average spot rates to prior year transactions. Gains and losses on foreign currency net hedging, are shown separately in the Income Statement and are excluded from the constant cu
Slide 37: Forward Looking Statements
FORWARD LOOKING STATEMENTS Forward-looking statements Sections of this Presentation may contain forward- k , : G ’ lans and expectations relating to its future performance, results, strategic initiatives and objectives, future demand and markets for th G ’ and services; research and development rela
Slide 38: IR Contacts
IR CONTACTS AEROSPACE PEEK Andrew Hanson EXPERTS Director of IR, Corporate Communications First to commercialise PEEK, with & ESG AEROSPACE unmatched knowledge and experience +44 (0) 7809 595831 ELECTRONICS [email protected] www.victrexplc.com MEDICAL DRIVE CORE BUSINESS Delivering the key PEEK & PAEK