Interim Management Statement

RNS Number : 3576R

Elementis PLC

25 October 2013

 



Elementis - Interim Management Statement

Elementis plc (ELM.L, "Elementis" or "the Group"), the Global Specialty Chemicals Company, today issues its Interim Management Statement for the three months ended 30 September 2013.

Commenting on the Group's performance Group Chief Executive, David Dutro, said:

"Elementis is pleased to report another resilient performance in spite of an economic background where growth is turning out to be slower than generally anticipated. The Group's strategy of creating its own growth opportunities, combined with its strong, diverse market positions and a return to more normal trading patterns in oilfield drilling are the key drivers of the Group's 12 per cent sales growth in the current quarter, compared to the same period last year. The integration of the Group's two recent acquisitions, Watercryl in Brazil and Hi-Mar in the US, is progressing well and the second and final phase of our new coatings additives plant in North America is well underway. These investments strengthen the broad geographic presence and enhance the Group's exciting market positions and will support further growth over the medium term."

Specialty Products sales improved by 15 per cent, or 8 per cent excluding acquisitions and currency.

·     In coatings, sales in North America were higher by 12 per cent, mainly due to the acquisition of Hi-Mar earlier in the year. In Asia Pacific, sales increased by 11 per cent as the business continued to benefit from its market position in China, experiencing strong demand from local high-end industrial markets. Latin American sales increased by 68 per cent, driven by the acquisition of Watercryl in September 2012, and good progress is being made in expanding Watercryl sales outside of Brazil. In Europe, underlying economic conditions continue to be subdued as headline sales improved by 3 per cent, with currency contributing 4 per cent.

·     In personal care, the business continued to benefit from the initiatives of a refocused management structure, with additional resources in new geographies and new product launches. As a result, sales improved by 16 per cent or 13 per cent excluding currency.

·     Sales to the oil and gas drilling sector continued to demonstrate a sustained recovery following the impact of industry destocking in the latter part of 2012, maintaining the robust pace reported for the first six months of the year. Consequently, sales to this sector were at a similar level to the average quarterly sales in the first half of this year and 35 per cent ahead of the same period last year.

·     Operating margin in the third quarter was similar to that reported for the first six months of the year as overall pricing and contribution margins remained stable.

As expected, following the planned maintenance shutdown in the early part of the year, Chromium trading patterns in the current quarter returned to more normal levels. Chromium sales in the quarter were 5 per cent ahead of the same period last year and at a similar level to the second quarter of the current year. As production volumes and plant utilisation returned to more normal levels, margins improved compared to the first half of the year and operating margin for the full year is expected to be in the range of 24-26 per cent. Consistent with our strategy of stable earnings and cash flow, we expect the performance of Chromium in the second half of 2013 will be similar to the second half of last year.

Cash flow continues to be a positive aspect of the Group's performance and it is anticipated that the end of year balance sheet will show a net cash balance of at least $30 million.

Overall we remain confident in the Group's ability to deliver growth that is in excess of the underlying economies in which it operates and expect our full year earnings per share to be in line with market expectations.

Enquiries:

Elementis		+ 44 (0) 207 408 9300
Brian Taylorson, Finance Director
FTI Consulting		+ 44 (0) 207 831 3113
Deborah Scott
Matthew Cole

 

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