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(Sharecast News) - Shares in Morgan Advanced Materials were in a serious slide on Friday morning, after it reported a modest decline in revenue for 2024, with organic growth offset by weaker demand in the second half, as it flagged further likely revenue declines in 2025.
The FTSE 250 company said revenue fell 1.3% to 1.1bn, although it achieved a 3.7% organic increase in constant currency terms.
Adjusted operating profit rose 6.7% to 128.4m, with a 90-basis-point improvement in profit margin to 11.7%.
Return on invested capital also increased by 90 basis points, to 18.5%.
Despite challenging market conditions, Morgan Advanced Materials said it generated a 29% increase in cash from operations, reaching 162.9m, as free cash flow edged up 2.7% to 15m.
The company's balance sheet remained solid, with net debt rising to 226.2m but staying within its targeted leverage range.
Its board announced an extension of its share buyback programme, with a second tranche of up to 10m to follow the initial 10m repurchase.
Looking ahead, the company said it expected a mid-single-digit organic revenue decline in 2025, citing ongoing uncertainty in several end markets.
In response, it said it had accelerated its simplification programme, now expected to deliver 27m in annual savings from 2026, up from a prior estimate of 22m.
Management anticipated that would support a return to a 12.5% operating margin in 2025.
The semiconductor sector remained a key focus, but investment had been scaled back due to sluggish growth in battery electric vehicles and high customer inventory levels.
Morgan said it now expected to invest 60m in semiconductor capacity, down from a prior estimate of 100m, with projected incremental revenues of 40m and adjusted operating profit of 12m by 2027.
"We have delivered robust organic constant currency revenue growth against a backdrop of increasingly challenging end-markets, with good progress made in our business simplification and efficiency initiatives, continuing our track record of self-help," said chief executive officer Pete Raby .
"We remain focused on delivering against our strategic initiatives and expect a return to a 12.5% adjusted operating profit* margin during 2025."
Morgan Advanced Materials also announced changes to its board, with Jane Lodge set to join as audit committee chair designate on 1 June, before succeeding Jane Aikman following the 2026 annual general meeting.
Meanwhile, Helen Bunch would step down from the board after the company's AGM in May, with Alison Wood taking over as remuneration committee chair.
"We are delighted that Jane will be joining the board - her extensive boardroom knowledge, audit and financial expertise and background in international companies with operations in North America will further strengthen and enhance the capabilities of our board," said chair Ian Marchant.
"On behalf of the board, I would like to thank Helen for the valuable contribution she has made during her tenure on the board chairing the remuneration committee.
"Her insight, commitment and professionalism are greatly appreciated by the board."
While short-term demand remained uncertain, Morgan Advanced Materials said it was confident in its medium-term financial framework, maintaining its capital expenditure guidance and expecting an effective tax rate of 26% to 28%.
At 0857 GMT, shares in Morgan Advanced Materials were down 19.9% at 206.88p.
Reporting by Josh White for Sharecast.com.