We invented and are the global market leader in PEEK1, with over 45% share by volume, more than double the level of our next largest competitor. Our high-performance polymer solutions are used in the most mission-critical and highly certified products across multiple, high-value industries.
We expect global PEEK volumes to grow at a c.5% CAGR over the next five years, driven by a combination of underlying growth across key end markets (Aerospace & Defence, Automotive, Electronics, Energy & Industrial and Medical) and increasing penetration of PEEK within existing and new applications. We are strongly positioned to capture this growth given our market leading position.
Our market leadership is underpinned by the unique properties of our PEEK offering, including higher load bearing capacity, faster processing times and higher durability levels, as well as high mechanical strength, high temperature capability and best-in-class chemical, wear and fatigue-resistance.
Additionally, our vertically integrated, predominantly Western-based manufacturing footprint and deep applications engineering expertise offer security of supply and quality for our longstanding customers in regulated and protected markets. These competitive advantages create high and durable barriers to entry, with c.90% of Group revenue protected from Asian competition. While Asian producers remain focused largely on domestic, lower grade opportunities, we have continued to grow strongly in China, achieving a 17% CAGR over the past decade.
Under the leadership of our Chief Executive Officer Dr James Routh, we have established a clear strategic plan to optimise our competitive advantages to enhance performance and deliver sustainable value for shareholders. Our strategic plan is based on relentless execution with three core priorities:
We have established a de-centralised, agile and simplified operating model to drive a customer- and performance- focused culture throughout the organisation.
We are prioritising nearer term, high value and high margin applications where we have the strongest defensive moat and are strongly positioned to lead the next phase of product development with our customers. We expect these initiatives, alongside the underlying growth across all of our end markets, to drive profitable revenue growth and a higher return on capital.
We are relentlessly focusing on efficiency and cost structure optimisation to drive a significant increase in our gross and operating margin. This includes process and operating improvements, increasing digitisation and automation, product rationalisation and supply chain optimisation.
Over the next five years, we expect our strategic plan to deliver profitable growth and cash generation, targeting:
The delivery of these financial targets will be supported by a disciplined capital allocation policy, which includes:
Focused organic growth investment with capex of c.5-8% of annual revenue.
Total cash returns to shareholders of at least 75% of cumulative levered free cash flow from FY27 to FY31.
Includes an ordinary dividend of 30 pence per share in respect of FY26, with a final dividend of 16.58 pence per share.
Intention to grow the ordinary dividend over the period (weighted 1/3 interim and 2/3 final post FY26), with earnings cover of c.2x by FY31.
Remainder of returns to be delivered through share buybacks or special dividends.
Surplus capital will be prioritised in the near-term for additional cash returns to shareholders, with potential bolt-on M&A subject to disciplined criteria and after a sustained recovery in organic performance.
This capital allocation policy is based on maintaining a strong balance sheet for the Group, targeting less than 1x net debt / EBITDA leverage ratio over the period.
Together, this underpins a compelling proposition to drive sustainable and significant value creation for Victrex shareholders over the medium term.