Morgan Advanced Materials (MCRUF) Q2 2026 Earnings Report

The call presents a constructive operational and strategic update: revenue momentum, meaningful growth in Technical Ceramics and Energy end markets, tangible site turnaround and procurement progress, and clear targets for margin expansion (12% by 2028). However, H1 improvements were partly supported by a non‑recurring GBP 8.9m take‑or‑pay payment and the group still faces specific challenges — equipment issues earlier in the year, restructuring and ERP costs, softer European industrial demand, Performance Carbon weakness ex‑phasing, and modest near‑term free cash generation. On balance, management demonstrates credible execution on multiple strategic levers and measurable operational improvements outweigh current headwinds, while risks remain around non‑recurring items and regional demand softness.

Guidance for 2026 reiterated organic constant-currency revenue growth of around 2% for the full year, with second-half adjusted operating margin expected to be broadly in line with H1 excluding a one-off £8.9m take‑or‑pay phasing benefit (H1 revenue £518m; H1 headline adjusted operating profit £57.8m; H1 adjusted margin 11.2% or 9.6% ex‑phasing; take‑or‑pay added ~160bps). Management expects 2026 simplification costs of ~£10m (part of a £45m program delivering £27m annual run‑rate savings), ERP spend of £22–24m in 2026 (program winding down toward end‑2027), capital expenditure of ~£50m in 2026 (weighted to H2) and medium‑term CapEx ~£50m or ~1.2x depreciation; net finance charge ~£24m; effective tax rate 27–29%; year‑end leverage around 1.7x (net debt £253m, ~2x EBITDA at 30 June) moving toward a 1–1.5x target, with positive free cash flow expected by end‑2027; interim dividend held at 5.4p and adjusted EPS in H1 was 10.7p.