Victrex shares sparkle on bullish update

09/04/2002

Shares in fully-listed Victrex clipped ahead by 7p in early dealings today after the small cap chemicals concern cheered investors with an upbeat first half trading result. James Crux reports.

Victrex (VCT) is the only maker of PEEKa polymer, a high performance thermoplastic which is used in the industrial, automotive, aerospace, medical and food industries. The company has manufacturing plants and research facilities in the UK, and sales and distribution centres serving more than 30 countries worldwide.

In today's bullish trading update for the first half to March, Victrex said demand had continued at the increased levels seen at the start of the calendar year, and reported first half sales volumes of about 550 tonnes. This means the company should unveil sales volumes of about 1,200 tonnes for the current year to September, still lower than previous expectations and also lower than volumes in 2001. Interim figures are due out on 11 June.

In December, the group's 2001 preliminary figures showed sales volumes up 21 per cent at 1,603 tonnes in a year of record sales and profits. Turnover improved 23 per cent to �72.1 million, and profit before tax put on 40 per cent at �22.3 million. Investors also saw a 10 per cent rise in their total dividend at 6.7p. Nevertheless, at the time the board flagged up falling first quarter sales as business was hit by the global downturn.

Before today's bullish statement, house broker Cazenove was forecasting �20.3 million of pre-tax profit, giving 18.4p of earnings for the current year. And with the shares sparking up by 7p to 323.5p on the news, against 52-week highs and lows of 402.5p and 245.5p, Victrex is trading in line with the 17.47 sector average, on about 17.6 times 2002 earnings. Not cheap, but the outlook appears much improved.