COVID-19 update

Press Release

Morgan Advanced Materials plc

05 June 2020

COVID-19  update

Morgan Advanced Materials plc is issuing a further update in relation to the impact of COVID-19 on the business, following its statement on 31 March 2020.

Our employees and operations

The health, safety and wellbeing of our employees remains our absolute priority. We have introduced heightened safety measures such as social distancing and hygiene measures in all of our plants to ensure the safety of our employees and follow the advice of the relevant local governments. We have also reduced activity and closed sites in geographies where that was required.  This included the short-term closure of sites in China, Italy, India, South Africa and Mexico for a period of time. Those plants have now reopened and all of our plants are operating at this time.  

Trading performance

Sales for the 21 weeks from 1 January to 24 May 2020 were 8.8% lower for the Group, on an organic constant-currency basis, compared to the same period last year.  This reflects a 3.2% decline in the first quarter, largely driven by shut-downs in China, followed by a decline of 19.5% in April and May, as the impact of the COVID-19 pandemic was felt more widely across the rest of the Group. 

By business, the organic constant currency trends for the 21 weeks to 24 May 2020 compared to the same period last year are as follows:

-     Carbon & Technical Ceramics division sales were 4.3% lower, with growth in Seals & Bearings partially offsetting declines in Electrical Carbon and Technical Ceramics. 

-     Thermal Products division sales were 14.6% lower. 

Mitigating actions and financial position

We have taken action to reduce costs, improve cash flow and increase liquidity.  These include reductions to capital expenditure other than for vital health, safety and environmental matters, a temporary hiring freeze for all but the most critical roles, a curtailment of discretionary expenditure and temporary salary reductions for the Executive team and Board. 

We are also taking steps to improve the structural cost position of the Group for the longer term, so that we emerge from this downturn with an improved cost position. These actions will further reduce costs by £20m per annum by 2022, with an anticipated cash cost of £30m to deliver these savings; further details of this programme will be provided in the Group's half year results announcement which is due for release on 30 July 2020.

With respect to our liquidity position, we have no debt maturities until 2023, and as at 24 May 2020 we had net debt (excluding lease liabilities) of £177m, with cash of £95m and undrawn headroom of £115m under our revolving credit facility.   

We have a global diversified business, a clear strategy and a strong balance sheet.  We remain focussed on protecting our colleagues, serving our customers, containing our costs and preserving our financial position.

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