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(Sharecast News) - Shares in Victrex lost more than a tenth of their value on Thursday after the high-performance polymers specialist underwhelmed with a new five-year transformation strategy and capital allocation policy.
Victrex said it was targeting mid-single-digit organic annual revenue growth over the next five years, alongside a gross margin of around 50% and an operating margin in the mid-20s by FY31, with the improvements expected to come primarily from self-help measures.
The company is also targeting average annual operating cash conversion of more than 90%, while keeping capital expenditure at around 5% to 8% of annual revenues. It expects to generate approximately £250m of cumulative levered free cash flow through FY31.
Under a new capital allocation framework, Victrex plans to return at least 75% of cumulative levered free cash flow to shareholders between FY27 and FY31, while maintaining net debt-to-EBITDA below 1x.
For FY26, the group intends to pay an ordinary dividend of 30p per share, including a final dividend of 16.58p. It plans to grow the ordinary dividend over the five-year period, with any additional shareholder returns delivered through share buybacks or special dividends.
Chief executive James Routh said the strategy was designed to "fully unlock" Victrex's growth potential and deliver sustainable improvements in revenue, profitability and cash generation. The company wants to simplify its operating model, focusing on higher-value applications and reducing costs through process improvements, automation and supply-chain optimisation.
The stock was down 11% at 872p just before the close of play, pulling back sharply after a strong performance over the year to date. The stock has still gained 57% in 2026 alone.
See the latest RNS on Investegate.
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