The group, which provides advanced materials for use in aerospace, transport and electronics, warned in January that profits would be hit by a strike at General Motors and cutbacks at Boeing - two of its biggest customers.
The group was also hit by the knock-on effects of the Asian crisis. US steelmakers, struggling to fight off cheap Asian imports, cut their orders.
In response Morgan is undergoing a big restructuring, which will see it shed a total of 1,800 jobs worldwide, up to 300 of them in the UK, to achieve savings of pounds 21m a year. It is also disposing of all but a core of eight businesses, focusing on carbon and ceramics.
Yesterday Morgan said talks to sell its speciality chemicals business, by far the biggest chunk of its disposal programme, were nearing completion and named a figure of pounds 174.3m. It also said it planned to buy back 15 per cent of its own shares this year.
Ian Norris, chief executive, said the changes would shrink the workforce from 15,500 to 13,600, while annual savings should be enough to return the group to growth.
After marking down the shares by 30 per cent in January, the City reacted mildly to the results. Profit on ordinary activities before exceptionals fell only 19 per cent to pounds 91.1m, at the top end of expectations. The shares fell 3p to close at 247p.Reuse content