Victrex to axe 10% of jobs as slides into the red amid China charge

(Alliance News) - Victrex PLC on Monday said it is cutting 10% of its workforce as it reported a hefty first half loss hit by a GBP60.6 million impairment charge in China and weaker margins.

The Lancashire, England-based polymer producer swung to a first-half pretax loss of GBP44.0 million in the six months to March from a GBP17.2 million profit a year earlier.

Underlying pretax profit fell 18% to GBP19.0 million from GBP23.2 million, while underlying earnings per share declined to 17.2p from 22.6p.

Revenue rose 0.8% to GBP147.1 million from GBP145.9 million, with sales volumes up 5.9% to 2,137 tonnes from 2,018 tonnes, driven by its Sustainable Solutions division.

After a soft start to the financial year, the second quarter saw improved results, Victrex said, with sales volume up 14% on the prior year to 1,279 tonnes, a "strong step up" from 858 tonnes in the first half.

"Performance reflects that whilst sales volume was strong, revenue growth lagged volume growth due to a weaker sales mix," Victrex pointed out.

Gross margin declined to 41.7% from 44.1%, below most recent guidance, driven by a softer average selling price within Sustainable Solutions, weaker Medical sales and currency.

For the financial year to September 2026, Victrex now expects a slightly lower gross margin versus 45.3% in the prior year.

Shares in Victrex fell 4.8% to 561.00 pence each in London on Monday morning.

Victrex said it remains committed to its manufacturing plant in China despite the charge noting the facility is "in our fastest growing region." But it warned while the plant is expected to see increased volumes this year, it will remain "significantly loss making and cash negative in the current year."

The charge related primarily to fixed assets at the plant in Panjin.

"We are currently assessing the most effective way to improve the rate limiting step for the Panjin plant, including what investment may be required to increase our capacity in China and to take advantage of the significant long-term opportunities that we continue to see," the firm said.

Separately, Victrex will take a further GBP10 million of non-cash exceptional charges in the second half of the financial year as its project and portfolio review is completed.

In addition, it outlined plans to cut 10% of its workforce, primarily in central functions.

"We have not adapted quickly enough to changed market conditions," claimed Chief Executive James Routh.

"Making Victrex a simpler, more differentiated and more customer focused business is essential to return us to sustainable profit growth," he added.

The firm expects cost savings of at least GBP10 million in financial 2027 from its profit improvement plan.

Looking ahead, Victrex expects full-year underlying pretax profit between GBP42 million and GBP44 million, down from GBP46.4 million in the financial year to September 2025.

Victrex said the conflict in the Middle East had no material impact on its business in the period but warned of potential implications for global demand and energy costs from ongoing events in the region.

"We are already reflecting the expected impact of this in pricing discussions with customers," Victrex said.

The interim dividend is unchanged at 13.42p per share.

By Jeremy Cutler, Alliance News reporter

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