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Investing.com -- U.K. polymer supplier Victrex (LON:VCTX) reported a weaker-than-expected performance for the first half of fiscal 2025, with profits falling short despite an increase in volumes.
The company’s shares tumbled more than 7% after the market open in London.
Victrex posted pretax profit of £23.2 million, down 17% from the previous year and below the £26.4 million estimated by Jefferies analysts. Group revenue came in at £145.9 million, while volumes grew 16% year-on-year to 2,018 tonnes.
Meanwhile, average selling prices (ASPs) declined to £72.3/kg from a previous guide of £75/kg-£80/kg, weighing on margins. Gross margin narrowed by 390 basis points to 44.1%.
It also flagged a £40.7 million net debt position.
The company faced continued headwinds from foreign exchange, weak Medical (TASE:BLWV) demand, and higher costs tied to its China expansion.
Management upgraded its volume outlook for full-year 2025 to high single-digit growth, up from “at least mid-single-digit,” but warned of lingering risks from global trade tensions and a still-challenging product mix. Second-half profit is now expected to be in line with the £31.1 million posted in second half of 2024.
Jefferies analysts said the update implies around a 15% downgrade to full-year consensus and their own forecasts.
“There continues to be very few signs of a Medical recovery, and when this mix headwind is combined with FX & China ramp-up costs, profitability continues to be challenging,” they wrote, adding they expect a negative share price reaction, and double-digit consensus downgrades.
"We still see Victrex as an attractive cyclical recovery story, and valuation is attractive, but it is clear that we need some signs of life in Medical before we can see any earnings progress," the analysts continued.