In 1993, Victrex was formed following a management buyout from Imperial Chemical Industries (ICI). They took with them their then patented product Polyaryletheretherketone (PEEK), a polymer that forms the basis of all their products.Today you will find PEEK in a wide variety of industries and forms; from the diaphragm in the speaker of a smartphone just microns thick, to an entire gear system in a luxury car.
PEEK has many attractive attributes which underpin the demand. Firstly, it is lighter, more heat resistant, and more durable than metal. Secondly, it can be injection moulded into bespoke forms, making it much faster to process than metal. These attributes make it ideal for both industrial (80% of revenue) and medical (20% of revenue) applications.
Victrex often approach their customers, creating bespoke solutions and proving concepts that deliver both manufacturing efficiencies and relative outperformance over metal alternatives. The products are often low cost but safety and/or performance critical. This ties in the customer and protects Victrex from being displaced by a lower quality, but cheaper, competitor.
Victrex produce consistently high returns on capital, boast EBITDA margins of over 40%, have no debt on their balance sheet and are highly cash generative.