A surge in sales in China, India and south-east Asia combined with a shift towards higher margin products helped Morgan Crucible to increase pre-tax profits by 65 per cent last year.
Mark Robertshaw, chief executive, said the advanced materials company had profited from “the successful introduction of new products and new technologies and …a shift away from the more commoditised stuff like automotive towards the higher-value-added stuff like aerospace and medical”.
However, he cautioned that the business environment in 2012 would be more challenging, pointing out that “in 2011 we were still getting some of the benefits of the later cycle recovery coming through. We wouldn’t expect that to be repeated in 2012 and 2013”.
The company, whose materials are used to make products ranging from artificial hips to military body armour and solar panels, generated revenues of £1.1bn in 2011, up 8 per cent on 2010.
Morgan Crucible’s group operating margin rose from 9 per cent to 12 per cent, helping pre-tax profits increase from £68m to £111m.
Shares in the FTSE 250 company rose 6.7 per cent to trade at £3.48 on Wednesday afternoon. Analysts also reacted positively, with Chris Dyett of Investec, saying that the company had “never been in better shape”.
Revenues from emerging economies jumped by 23 per cent, and accounted for about a quarter of the group’s total. Sales in India were up more than 30 per cent, while Chinese revenues rose 14 per cent and passed £100m for the first time.
Although European demand was more muted, the company said that the majority of established end markets had now returned to “pre-recessionary levels” of revenues and profits.
Net debt fell from £236m to £215m, equating to 1.2 times the company’s earnings before interest, tax, depreciation and amortisation.
Mr Robertshaw said that this gave Morgan Crucible the financial headroom to consider bolt-on acquisitions, particularly if they would provide access to new technology. That, he said, could help shift the mix of the business towards higher margin sectors such as aerospace, medical, and petrochemicals. However, he added that he expected the lion’s share of growth to be organic.
Morgan Crucible recommended a final dividend of 6p, giving a full-year dividend of 9.25p, up from 7.7p the previous year, payable from earnings per share which rose 70 per cent to 26.9p.
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