Polymer manufacturer Victrex (VCT) is struggling with the impact of de-stocking and unfavourable currency movements, partially contributing to a weaker than anticipated performance in the quarter to 31 December.

Since December, sterling has strengthened against the US dollar and euro amid Brexit progress.

The impact shouldn’t be surprising as Victrex has previously stated the stronger pound could become a headwind, particularly after reaping the benefits of the pound’s fall in 2017.

Reassuringly, expectations for the second half have remain unchanged but Victrex will need to deliver a stronger performance to offset the weak start to its financial year.

Shares in the company are broadly unmoved at £23.60 but have plunged 30% since October as weaker trading has been weighing on sentiment.

It is not all bad news as headwinds dragging on trading are expected to ease back in the six months to 30 September. There are already positive signs with sales in the automotive division improving in January and February.

Victrex is investing in future growth via its ‘mega-programmes’ that should help the company reach its ambition of becoming an integrated solutions provider for polymers and parts.

In the first quarter, Victrex invested in a partnership with manufacturing company Surface Generation to potentially speed up its manufacturing processes.

Victrex also invested in Dutch firm Bond 3D High Performance Technology to use its printing technology to accelerate the 3D printing of high-performance plastic parts.


In December, the company warned of a slowdown its automotive division and no expected volumes in its consumer electronics division.

Sales at Victrex in the first quarter fell 18% to £64.1m compared to the same period last year, driven by a 22% decline in sales volumes from 1,051t to 822t.

Numis analyst Kevin Fogarty already cut pre-tax profits forecasts by 2.1% to £124.5m ahead of the trading update, forecasting double-digit volume and sales declines. He is considering further cuts of 1% to 2% as trading was worse than expected.

UBS analyst Andrew Stott is more positive, flagging a potential ‘material recovery’ in Victrex’s second half thanks to a recovery in key end markets and growing contributions from new projects.

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Issue Date: 06 Feb 2019