Ceramics and carbon manufacturer Morgan Advanced Materials (MGAM) is suffering the effects of weak trading conditions in North America and China, warning its reported revenue in the second half will be around 7% lower than the first half.

Full year earnings before interest, tax, depreciation and amortisation (EBITDA) are expected to be at the lower end of analyst expectations at around £110 million.

The gloomy trading statement sends the shares tumbling 12.4% to 234p.

MGAM - Comparison Line Chart (Rebased to first)

Morgan is a diversified global materials business with a broad end-market but this isn’t enough to protect the group from deteriorating demand in major trading regions.

North America has been the most affected by the economic slowdown, particularly the oil and gas, transportation and mining markets.

Morgan’s outstanding order book at the end of October was 5.3% below last year and the company says it is cautious about the trading and macro-economic environment for the rest of the year.

Investec analyst Michael Blogg says the slowdown seems to be broadly based, which suggests confidence is the common thread and customers are holding off wherever they can.

‘Weakness in oil and gas and mining is not surprising, but it is also true of project-based business generally; even consumables are currently less robust than we would have expected,’ he says.

Investec has put its estimates and target price under review but Blogg says he’s minded to remain positive.

‘We have been positive on the prospects for Morgan and we still believe that the market undervalues its potential, notwithstanding news like today’s concerning trading,’ he states.

Morgan’s new chief executive is expected to set out his strategic view soon.

Issue Date: 12 Nov 2015