11 December 2000
ELEMENTIS plc TRADING UPDATE
Elementis plc, the specialty chemicals group, is today announcing a trading
update, in line with current market practice, in advance of the Group's
preliminary results for 2000 which are due to be announced on 28 February
In the Group's interim report in August, concerns were expressed relating to
rising energy costs and also the weakness of the euro. Since then, the
adverse energy price trend in particular has continued, with current US gas
prices treble those at the start of the year.
Despite the significantly more challenging environment, Elementis
anticipates that trading results for the year to 31 December 2000 will be
at, or close to, its previous expectations, reflecting the continuing
benefits from a Group wide focus on business re-engineering and some short-
term protection from forward gas purchasing.
Year on year sales volume growth has remained strong in the second half,
although at lower levels than in the first half. With the exception of
chrome sulphate, good year on year growth has continued in all product
categories, reflecting the product focused sales and marketing strategy
introduced a year ago. Demand for chromic oxide has been particularly good.
Average product pricing is similar to that in the first half. The new
energy efficient kiln at Corpus Christi, Texas, is operating in line with
expectations; this, together with some short-term protection from forward
gas purchasing, has partially mitigated the continuing upward trend in gas
prices which is increasingly impacting the business's financial performance.
Pigments & Specialties
At Elementis Pigments, the improved financial performance achieved in the
first half of the year has continued into the second half. Iron oxide sales
are growing strongly and the benefits of the major restructuring and
upgrading programme are reflected in enhanced financial performance compared
to a year ago, partially offset by lower profits on zinc products for the
depressed UK market and higher energy prices.
At Elementis Specialties, sales growth continues to come primarily from oil
exploration drilling, which is benefiting from the continuing market
recovery, inks and personal care markets. Sales growth of rheological
additives into the coatings market was slower than in the first half.
Performance in Europe continues to be hindered by the relative weakness of
the euro against sterling and the US dollar.
Trading performance has continued broadly in line with the Group's
Performance in the minerals processing and industrial rubber business units
has been largely offset by lower sales and profits on major process
technologies contracts. Management action is being taken to address this.
The programme to simplify the Linatex business and focus on its core
specialty rubber capability is ahead of schedule and close to completion;
only one site remains to be closed.
There is considerable uncertainty over the future timing and direction of
energy prices, particularly for gas in the US. As a consequence, it is too
soon to make any comment on the prospects for next year.
Elementis plc 020 7398 1400
Lyndon Cole Group Chief Executive
George Fairweather Group Finance Director
Anna Passey Head of Corporate Communications
Brunswick Group Limited 020 7404 5959