Morgan Advanced Materials Plc (LSE:MGAM) shares dropped in Tuesday's early deals, losing 8.6% to 213.5p, after it told investors that weaker end-markets dragged its 2025 earnings, prompting the group to launch a strategic review of its Thermal Products division as it pushes to sharpen its margin and growth profile.
The options to be reviewed will include a potential disposal of the unit.
"As part of our focus on maximising portfolio value, we are undertaking a strategic review of our Thermal Products division and further updates will be provided in due course," chief executive Damien Caby said in the results statement.
"We remain confident in delivering sustainable above-market organic revenue growth and returning the Group to a 12% margin by 2028."
He added: "The business has delivered a resilient performance against a backdrop of challenging markets. Demand in our end-markets has now broadly stabilised and, on an organic constant-currency basis, revenue has remained stable since the second half of 2024. We have made good progress against our priorities."
Looking at the numbers, the advanced materials manufacturer reported headline revenue of £1.03bn, down from £1.10bn, with organic constant-currency revenue down 3.3%.
Management said demand has now “broadly stabilised”, with revenue trends broadly steady since the second half of 2024, but semiconductors and European industrial markets remain a headwind.
Profitability eased as volumes and mix turned less favourable. Headline adjusted operating profit fell to £99.1m from £128.4m, taking the headline adjusted margin to 9.6% (2024: 11.7%).
The company highlighted efficiency and simplification actions as partial offsets, while also booking a £15.6m impairment linked to certain UK assets dedicated to the semiconductor materials growth market.
For 2026, Morgan said its outlook is in line with current market expectations, guiding for 1–2% organic constant-currency revenue growth and an adjusted operating margin at or around 10%.
The group maintained its full-year dividend at 12.2p per share and said leverage should move back towards its framework as it realises the remaining proceeds from the Molten Metal Systems disposal completed in November 2025.