Risk appetite across UK share markets is struggling for traction on Monday. The daily change on both the FTSE 100 and FTSE 250 are practically unchanged from last week. But the Victrex (LSE: VCT) share price is having no problem getting traction in the start-of-week business.
Demand for the polymer product manufacturer’s shares have blasted off following the release of fresh financials. The Victrex share price has just soared to fresh-record highs above £26. This represents a 10% daily rise.
Plastic fantastic
In its half-year results, Victrex advised of a healthy pick-up in sales as conditions in its end markets continued to improve
According to the FTSE 250 firm, sales volumes rose 5% during the six months to March, to 2,087 tonnes. Volumes strengthened from January too, with second quarter volumes up 8% year-on-year.
Demand was particularly explosive at Victrex’s Electronics division and the Manufacturing & Engineering unit over the six months. Sales in these parts of the business soared 28% and 27%, thanks to new application growth.
However, revenues at Victrex fell in the first half, despite this pick up in volumes. These clocked in at £150.9m, down 0.4% at real exchange rates. Though this was up 2% year-on-year at constant currencies.
The plastics giant attributed the fall to “a softer sales mix.” Victrex saw sales at its Medical division drop 16% in the half, the firm simply saying that “elective surgeries take time to return.”
This more than offset the faster sequential improvement in the company’s Industrial end markets. This unfavourable mix caused the average selling price of its products to slip to £72 per kilogram from £76 in the same 2019/2021 period.
The first-half sales fall, allied with an uptick in cost of sales, caused Victrex’s pre-tax profits to drop 7% to £46.6m.
Dividend resumption boosts Victrex’s share price
Commenting on those six-month numbers, chief executive Jakob Sigurdsson said: “Victrex delivered good volume growth through the first half despite a strong performance in the prior year period, as improving end-markets and our solid and sustainable recovery from the impact of COVID-19 continues.”
He added that the company enjoyed “record volumes for March and April,” despite a softer sales mix, and described Victrex’s order book as “robust.”
As a consequence, the FTSE 250 firm said “we remain comfortable with current full year expectations.” It added that profits will be weighted towards the first half.
Victrex’s also described its financial position as “strong” with the business reporting total cash of £79.6m as of March. This, along with those improving sales, encouraged the company to announce it was resuming the payment of dividends.
For the first half, Victrex will pay a dividend of 13.42p per share, it said. Cash conservation, in the wake of Covid-19, prompted the company to ultimately cancel paying an interim payment in 2020. Dividends at the business are now back to pre-pandemic levels, the firm added.