Morgan Advanced Materials plc

Revenue was GBP 518 million in the first half of 2026, up 4.8% on an organic constant-currency basis. Excluding the GBP 8.9 million take-or-pay phasing benefit, revenue grew 3% constant currency. Group headline adjusted operating profit was GBP 57.8 million and adjusted operating margin was 11.2%; excluding the take-or-pay benefit, margin would have been 9.6%. Adjusted EPS was 10.7p, free cash flow was an inflow of GBP 3.5 million, and net debt was GBP 253 million excluding lease liabilities, or 2.0x EBITDA. For 2026, management expects organic constant-currency revenue growth of around 2%, second-half adjusted operating margin broadly in line with the first half excluding the GBP 8.9 million phasing benefit, ERP spend of GBP 22 million to GBP 24 million, capital expenditure of around GBP 50 million, net finance charge of around GBP 24 million, an effective tax rate of 27% to 29%, and year-end leverage of around 1.7x.

Damien Caby said the first half showed “positive momentum” in revenue and profit and described progress on all three strategic levers: improving operational effectiveness, driving stronger growth, and maximizing portfolio value. He highlighted progress on two large site turnarounds, group procurement, and focused growth teams in selected markets, and said the company is on track to reach a 12% margin by 2028. He also said the Thermal Products strategic review is progressing, with multiple options under consideration, including a potential disposal.

Richard Armitage emphasized that performance was in line with expectations and that margin was improving sequentially. He cited revenue of GBP 518 million, adjusted operating profit of GBP 57.8 million, adjusted EPS of 10.7p, and free cash flow of GBP 3.5 million, while noting GBP 18.4 million of adjusting items, including GBP 11.5 million of ERP costs and GBP 9.4 million of restructuring costs. He said net debt ended at GBP 253 million, leverage was 2.0x EBITDA, and year-end leverage should improve to around 1.7x as cash generation normalizes and Foseco India proceeds are received; he also said simplification costs should be around GBP 10 million in 2026 and CapEx should remain around GBP 50 million.

Analysts pressed management on the GBP 8.9 million take-or-pay timing, softness in European industrial demand, Aerospace/Technical Ceramics capacity, the planned disposal of Foseco India shares, the Thermal Products review, Thermal equipment issues, the 2027 profit bridge, and the semiconductor business. Management said the take-or-pay payment was straightforward: the customer no longer needed the products but honored the contract and settled in H1, European industrial demand is softer because customers are cautious on large CapEx decisions, and Aerospace capacity will be added in modest tranches as needed. They said interest in the Foseco India stake has been strong and a sale process should start after the close period, while Thermal options are still being assessed beyond a sale, centered on realizing the business’s growth and margin potential; semicon demand is mixed, with legacy silicon carbide volume lower than expected but some rebound in other silicon-related areas.