Victrex: Volumes in Line With Previously Released Numbers

Narrow-moat Victrex VCT reported third-quarter volumes of 818 metric tons, down 38% versus the prior-year period, but in line with the estimate of 800 metric tons that was disclosed in its recent trading update. Volumes are declining this year on macroeconomic weakness and destocking across several end markets. Weakness in the third quarter was mainly seen in electronics, energy, and industrial, and with value-added resellers while growth in aerospace was good and automotive was stable. The medical business continues to perform strongly with year-to-date revenue up by a double-digit percentage. The gross margin is expected to improve in the second half of the year with easing energy costs and higher selling prices. The company continues to expect 2023 profit before tax to be GBP 80 million-GBP 85 million. We expect to lower our near-term estimates, but don’t expect to make a material change to our GBX 2,100 fair value estimate. At current levels, the shares look undervalued.