Victrex Navigates Headwinds, Volumes Up But Profitability Pressured

Victrex plc (LON: VCT), a leader in high-performance polymers, reported its preliminary results for the year ended September 30, 2025.

Despite a 12% surge in sales volume, profitability was impacted by adverse foreign exchange movements, start-up costs at its new China facility, and shifts in sales mix. The company is implementing a profit improvement plan to address these challenges.

Revenue increased by 1% to £292.7 million, or 3% in constant currency terms. However, underlying profit before tax (PBT) declined by 21% to £46.4 million, or 10% in constant currency.

Reported PBT saw a significant 44% increase to £33.8 million due to lower exceptional items compared to the previous year. Basic earnings per share increased by 62% to 32.0p. The company maintained its dividend per share at 59.56p.

Despite the volume growth, Victrex faced pressure on average selling prices (ASP), which fell to £70/kg from £78/kg the prior year. The decline was largely attributed to changes in sales mix and unfavorable foreign exchange rates.

Medical revenue also experienced a 5% drop, primarily driven by weaker Spine sales, although the Non-Spine medical business grew by 7%.

The company's gross margin contracted by 90 basis points to 45.3%, reflecting the impact of sales mix, £8 million in costs associated with the new China plant, and foreign exchange headwinds.

Net debt increased to £24.8 million, resulting in a net debt/EBITDA ratio of 0.34x at year-end.

To mitigate the profitability challenges, Victrex has initiated a Profit Improvement Plan, targeting at least £10 million in annual savings, with full-year benefits expected in FY 2027.

The plan focuses on streamlining operations, enhancing the “Go to Market” strategy, and improving procurement efficiency. A broader review of operations is planned for FY 2026, aiming for further commercial, cost, and operating efficiencies.

Victrex updated its capital allocation policy, maintaining the dividend while targeting a net debt/EBITDA range of 0.5x to 1.0x. Excess cash may be returned to shareholders through share buybacks or special dividends when the net debt/EBITDA ratio falls sustainably below 0.5x.

Jakob Sigurdsson, Chief Executive of Victrex, commented: “Although FY 2026 will be a transitional year, our foundations are strong, with a differentiated product portfolio across key end markets, well-invested assets and an addressable market approximately five times current levels, offering significant long-term opportunities for VICTREXTM PEEK.

“We will create a simpler and even more focused growth business, improving cost to serve and driving significant value creation for all stakeholders.”