FTSE 250 movers: Victrex, Direct Line tank on poor results, warning

(Sharecast News) - FTSE 250: 19,257.13 -1.00% Polymer specialist Victrex tanked after a 10% fall in pre-tax profit before to £39.1m.

Sales volumes dropped 14% to 1,941 tonnes, due to macroeconomic weakness in the electronics, energy and industrial, and value-added resellers (VAR) sectors, although it experienced good growth in aerospace and automotive.

Victrex maintained its interim dividend at 13.42p per share.

"Our first half performance was driven by strong pricing, an improved sales mix and currency, with revenue up 1%, despite a softer macro-economic environment, resulting in weaker volumes, compared to a record 2022 financial year," said chief executive officer Jakob Sigurdsson.

"Several end markets delivered good growth, including in aerospace and automotive, although this was not able to offset softness in electronics, energy and industrial, and VAR.

"In medical, we saw a record half yearly performance and our growth opportunities are increasing."

Direct Line said on Tuesday that average renewal premiums rose in the first quarter but warned that rising claims in its motor segment will put pressure on earnings.

Total group adjusted gross written premium income rose 8.4% during the quarter to £771.7m. The motor segment saw 3.3% growth to £358.7m, while home saw a 2.1% increase to £129m.

The company said average renewal premiums increased 19% in Q1 as it hiked prices in the motor division to improve margins. In the commercial segment, Direct Line said the "strong" premium growth seen last year continued into the first quarter, with gross written premium growth of 27.6%, driven by both direct own brands and NIG and other.

In Home, meanwhile, it highlighted "significant" price increases across the market.

The insurer said it incurred "modest" weather event claims in Q1, "well within" the 2023 full-year assumption of £80m.

However, Direct Line also said it had seen further adverse claims developments late last year and earlier this year in the motor segment, including commercial, particularly in relation to damage.

"This is expected to put pressure on earnings in 2023 including from prior-year reserve releases," it cautioned.

Acting chief executive Jon Greenwood said: "Trading has been positive over the first quarter with premium growth across Motor, Home and Commercial and this trend has continued into April.

"Our focus continues to be on restoring the capital strength of the group and improving Motor margins, where we have made good progress. Whilst 2023 earnings outlook continues to be challenging, the group has many strengths, and we continue to take the actions required to drive business performance. Our ambition over time to generate a net insurance margin of above 10% remains."

At 0825 BST, the shares were down 7% at 152.92p.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: "The road ahead continues to look bumpy for Direct Line. Just as weather-related claims ease back to more normal levels, there's little in the way of a let-off for the Motor division as damage-related claims tick higher.

"Add in claims inflation that continues to run at high single-digit levels, and the outlook for insurance profitability gets a little murky. There was positive news on the pricing front, especially in Motor, where planned rate hikes fed through to higher gross premiums. There'll likely be more pricing action over the year as Direct Line looks to plump up margins in Motor."

Shares in Marshalls slumped on Tuesday as the landscaping and building materials group cut annual guidance on the back of a 14% fall in like-for-like sales, due to lower new house building and continued weakness in private housing maintenance activity.

In the first quarter of the year, National House Building Council new housing starts were 27% lower year on year, which hit all the group's reporting segments, Marshalls said on Tuesday, The stock was down almost 14% in early trade.

"Management have acted quickly to reduce costs in the business and are accelerating plans to improve production efficiency, whilst ensuring flexibility to respond when market demand improves," it added.

Total group revenue for the first four moths of the year was up 12% to £227m from a year ago helped by the acquisition of Marley Group last year.

FTSE 250 - Risers

Carnival (CCL) 737.20p +4.95%

TUI AG Reg Shs (DI) (TUI) 556.00p +4.71%

Digital 9 Infrastructure NPV (DGI9) 65.40p +2.67%

Virgin Money UK (VMUK) 146.65p +1.52%

Hilton Food Group (HFG) 746.00p +1.36%

Baillie Gifford Japan Trust (BGFD) 760.00p +1.33%

Investec (INVP) 453.40p +1.25%

Balfour Beatty (BBY) 393.20p +0.87%

GCP Infrastructure Investments Ltd (GCP) 93.20p +0.87%

Bank of Georgia Group (BGEO) 3,060.00p +0.82%

FTSE 250 - Fallers

Victrex plc (VCT) 1,533.00p -7.87%

Marshalls (MSLH) 275.40p -7.58%

Direct Line Insurance Group (DLG) 152.90p -6.97%

Genus (GNS) 2,614.00p -5.77%

ASOS (ASC) 661.00p -5.14%

Great Portland Estates (GPE) 510.00p -4.58%

Bridgepoint Group (Reg S) (BPT) 237.00p -3.89%

Genuit Group (GEN) 299.00p -3.86%

Urban Logistics Reit (SHED) 135.00p -3.57%

Big Yellow Group (BYG) 1,175.00p -3.53%