Sparks

Morgan Advanced Materials reported H126 revenue up 3.1% to £518.1m (restated H125: £502.5m), or up 4.8% on an organic constant currency (OCC) basis and 3.0% excluding an £8.9m phasing benefit from a semiconductor take-or-pay contract that will not repeat in H2. Adjusted operating profit rose 5.5% to £57.8m and the adjusted operating margin improved 30bp to 11.2%, of which 160bp related to the take-or-pay phasing. Adjusted EPS rose 8.1% to 10.7p, while statutory operating profit fell 6.0% to £39.1m (restated H125: £41.6m) after specific adjusting items of £18.4m (restated H125: £12.7m), including £11.5m of global ERP costs. Free cash flow fell to £3.5m (restated H125: £4.6m), while net debt rose to £253.1m (restated H125: £249.1m) and net debt/EBITDA (ex-IFRS 16) reached 2.0x (restated H125: 1.8x). The interim dividend was held at 5.4p.

Technical Ceramics led growth, with revenue up 7.8% on an OCC basis to £183.7m and margin up 130bp to 13.0% on strong Aerospace & Defence performance and increased demand within Energy markets. Performance Carbon revenue rose 4.0% OCC to £158.3m, a 1.8% decline excluding the take-or-pay phasing, with  margin up 70bp to 17.1% as Wind-led Energy growth offset weaker body armour demand. Thermal Products revenue grew 2.5% OCC to £176.1m but margin fell 130bp to 6.4% on Q1 operational issues at a large US site, which management states are now resolved. The simplification programme remains on track for £27m of annualised run-rate savings by end-2026 at a £45m total cash cost.

Management guided to FY26 OCC revenue growth of c 2%, with the H2 adjusted operating margin broadly in line with H1 excluding the phasing benefit and noting an fx headwind, and reiterated its roadmap to a 12% margin in 2028. Leverage is expected to improve to c 1.7x by year end, helped by expected MMS disposal proceeds. Company-compiled consensus (to 5 August 2026) is for FY26 revenue of £1,010m, adjusted operating profit of £99m and EPS of 17.3p.