Half Year 2026 Morgan Advanced Materials PLC Earnings Call Transcript
Key Points
- Revenue grew 3% organically at constant currency in H1 2026, driven by strong performance in energy and aerospace & defense markets.
- Technical Ceramics division delivered strong growth of 7.8%, with operating margin improving by 130 basis points to 13%.
- The site turnaround at Augusta, Georgia is progressing well, with lead times reduced by over 50% and sales up 12%.
- The company is on track to achieve its 12% margin target by 2028, with a clear strategy and visible progress on all three strategic levers.
- Strong growth in energy markets, including industrial gas turbines for data centers, wind, and battery energy storage, is driving a double multiplier effect.
- Excluding a one-off GBP8.9 million take-or-pay benefit, H1 operating margin was 9.6%, highlighting underlying margin pressure.
- Demand for body armor and defense products declined, and European industrial markets are showing softer demand and cautious investment.
- The semiconductor business faces a structural headwind as certain product sourcing moves to China, leading to lower capacity utilization.
- Operational challenges, including equipment failures at the main North American facility, impacted margins in the Thermal Products division.
- The company expects full-year organic revenue growth of only around 2%, reflecting a cautious outlook due to geopolitical and macroeconomic uncertainty.
Good morning, everyone. I'm Damien Caby, Chief Executive, Morgan Advanced Materials, and I'm joined on the call today by Richard Armitage, our CFO. I will start today with a summary of our half-year results. Richard will then take you through the financial position, the outlook, as well as the technical guidance. And I will then come back to share progress against the strategy that we have unveiled in December last year.
And then we'll move on to Q&A. I am pleased to report that performance for the first six months of the year is in line with expectation. Revenue shows positive momentum and operating profit margin is improving sequentially. We're making clear progress against our strategy to unlock our potential by transforming our operational effectiveness and driving stronger. And more profitable growth. Within our transform effectiveness strategic lever, we're progressing well on two large side turnarounds and on the delivery of benefits from our group procurement approach. In drive growth, we have
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