Victrex outlines "compelling proposition" to "turn around" performance

(Alliance News) - Victrex PLC on Thursday, ahead of its Capital Markets Event, announced its "clear strategic plan" for growth over the next five years.

Victrex shares opened 1.8% higher on Thursday in London, but were down 8.2% at 900.00 pence at around midday.

The Lancashire, England-based plastic polymers producer said that during the event, it "will provide an update on the progress we are already making to turn around Victrex, our medium-term transformation strategy and financial framework."

Victrex said that through financial 2031, it is targeting mid single digit organic compound annual revenue growth; a gross margin of around 50% and an operating margin in the mid-20s; and around GBP250 million of cumulative levered free cash flow between financial 2027 and 2031, at least 75% of which it intends to return to shareholders.

It said this includes an ordinary dividend of 30 pence per share for financial 2026, including a 16.58p final dividend, and that it is targeting dividend growth over the five years.

Victrex intends to support the five-year targets through a disciplined capital allocation policy, which includes capital expenditure between around 5% and 8% of annual revenue. In the short term, it will prioritise surplus capital for additional shareholder returns.

However, it said there is potential for bolt-on mergers and acquisitions, "subject to disciplined criteria and after a sustained recovery in organic performance".

"We have a clear strategic plan focused on three priorities - Transform, Grow and Optimise - that are driving performance today and positioning us for long-term profitable growth," Victrex said.

It said that for the 'Transform' component, it has established a de-centralised, agile and simplified operating model.

For 'Grow', it is "prioritising nearer term, high value and high margin applications where we have the strongest defensive moat and are strongly positioned to lead the next phase of product development...We expect these initiatives, alongside the underlying growth across all of our end markets, to drive profitable revenue growth and a higher return on capital."

As for 'Optimise', Victrex said it is prioritising efficiency and cost structure optimisation to significantly increase its gross and operating margins, including through increased digitisation and automation.

"Victrex is a business that has significant growth potential given its unique competitive advantages," commented Chief Executive Officer James Routh. "Our transformation strategy is designed to fully unlock this potential and deliver sustainable growth in revenue, profitability and cash generation.

"We look forward to providing the detail on the building blocks of how we expect to deliver these outcomes, and the progress we are already making, when we meet with analysts and investors this afternoon."

By Emma Curzon, Alliance News reporter

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