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CORRECTED-UPDATE 1-Morgan Advanced Materials profit rises on revamp, cost cuts
July 23, 2014 / 8:00 AM / 3 years ago

CORRECTED-UPDATE 1-Morgan Advanced Materials profit rises on revamp, cost cuts

(Corrects last paragraph to say company is headquartered in Windsor, Berkshire not Windsor, Cornwall)

July 23 (Reuters) - Morgan Advanced Materials Plc reported a 5 percent rise in pretax profit as a restructuring of its businesses and cost cuts helped the British manufacturer improve margins amid tough market conditions.

Morgan Advanced Materials said order books across all its operating regions were strong and expected higher revenue from its Composites and Defence Systems business in the second half.

Though the improvement in orders is encouraging in the second half, Morgan expects market conditions to remain mixed, Chief Executive Mark Robertshaw said in a statement.

The company, which makes carbon and ceramic based high-temperature insulation products used in medical instruments, aerospace, power generation and fire protection systems, said revenue fell 8 percent to 448.4 million pounds ($765.3 million)for the first half

Morgan, which generates most of its revenue from outside the UK, said a stronger pound hurt revenue by 33.7 million pounds. Revenue from North America, which accounts for about 38 percent of its total revenue, fell 6.6 percent to 171.7 million pounds for the six months to June 30.

Europe accounts for 37 percent of its total revenue, while nd Asia brings in 25 percent.

First-half underlying operating profit margin was 12.1 percent, up from 10.6 percent a year earlier, Morgan said.

The FTSE-250 company said it would pay an interim dividend of 3.9 pence per share compared with 3.8 pence last year.

The company, formerly known as Morgan Crucible, launched its “One Morgan” restructuring programme last year to control operating costs. Costs and one-off items for restructuring fell 69 percent to 2.1 million pounds in the first half.

“The group is, rightly in our view, focusing on higher-growth, higher-margin applications where it can differentiate and we expect this to be evident in results,” Investec analysts said in a note to clients.

Investec kept its “buy” rating on the stock, but cut its price target to 345 pence from 365 pence to reflect weak markets and the impact of operational issues at the company’s technical ceramics business in North America.

Shares of the Windsor, Berkshire-based company were up 3 percent at 310 pence at 0756 GMT on Wednesday on the London Stock Exchange. ($1 = 0.5859 British Pounds) (Reporting by Aashika Jain and Abhiram Nandakumar in Bangalore; Editing by Gopakumar Warrier)

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