StockMarketWire.com - Plastics manufacturer Victrex said its third-quarter revenue had slumped 18% and margins had been squeezed, partly owing to a deferred elective procedures hurting its medical division.

Revenue for the three months through June fell to £58.8m, down from £72.0m on-year, amid a 12% drop in sales volume to 805 tonnes.

'Margin was impacted during the quarter by the deferral of some elective procedures affecting our higher margin medical business, as well as the under-absorption of fixed costs from lower production volumes,' Victrex said.

'We expect these effects will continue to impact margin for the remainder of the second half.'

For the year to date, revenue was down 3% to £210.3m.

'Following a broadly stable performance in April, the months of May and June started to see the impact of Covid-19 related headwinds, with group volume and revenue being more than 20% lower than the prior year,' Victrex said.

Aerospace, automotive and energy end-markets experienced the greatest level of decline, with performance being moderately weaker than market indicators.

'Pleasingly, the gradual return of some elective surgeries in Asia and continued growth in non-spine has kept year-to-date medical revenues ahead of the prior year in that region,' it added.

The company's net cash position at 30 June was slightly ahead of its expectations at £72m. It also had an undrawn and committed revolving credit facility of £20m, together with a £20m accordion facility.

'As previously communicated, we will assess macro and end market conditions later in the year, and the outlook for FY 2021, before making a declaration on dividends for FY 2020,' it added.

'With lower production levels reflecting weaker demand and planned inventory reduction, and consequently the under-absorption of fixed costs, together with a weaker mix, margin is anticipated to be further impacted in the second half and into FY 2021.'

'Whilst market indicators may remain negative across many of our end-markets as we move into our next financial year, we anticipate being in a better position later in the year to assess the outlook.'




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