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Elementis PLC (ELM)

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Monday 08 December, 2003

Elementis PLC

Trading Statement

Elementis PLC
08 December 2003




8 December 2003


                          ELEMENTIS plc TRADING UPDATE

Elementis today issues a trading update ahead of the preliminary results for the
year ending 31 December 2003.

Sales for 2003 in sterling terms are expected to be slightly ahead of those
reported for 2002. Strong sales growth in Asia and in Europe has been largely
offset by a decline in North American demand, particularly in the consumer
related seasonal coatings business, which has impacted Elementis Specialties,
Elementis Pigments and Elementis Chromium.

An upward trend in raw material and energy prices, higher costs relating to
investment in new product development, implementation of the Elementis ERP
(enterprise resource planning) system and costs associated with M&A activities
have put pressure on margins across all operating divisions. However, underlying
costs have been reduced and cost control disciplines continue to deliver
improvement. Operating profit for 2003 is anticipated to be above the 2002
level, and at the lower end of market expectations. It is anticipated that
earnings per share for 2003 will be comfortably within market expectations.

Implementation of the innovation strategy has enabled the introduction of four
distinct new Elementis Specialties products, with sales growth from new products
accelerating in line with expectations.

The construction of the new Elementis Pigments plant in Taichang, near Shanghai,
has progressed and is expected to start-up on schedule in the second half of
2004.

Sales of Linatex Specialty Rubber have shown continued strong growth with the
optimisation of the new plant in Malaysia and focus on core product performance
advantages.

The Elementis ERP system went live successfully in Elementis Specialties during
the fourth quarter as planned, and implementation in the remaining three
Elementis businesses will take place during 2004.

The acquisition of the OxyChem Chromium chemicals business has delivered savings
in line with and more rapidly than the most recently stated expectations.
Weakness in premium product markets and ongoing price decline due to
over-capacity have however put further pressure on margins. Global capacity
rationalisation is proceeding as expected and significant competitor plant
closures are in progress. Elementis Chromium has announced a 10 - 15% price
increase effective 1 January 2004 reflecting energy and chrome ore cost pressure
and tightening of the supply situation in Asia.

Assuming continued low overall economic growth, the outlook for Elementis in
2004 is likely to be clouded by continued raw material cost pressure, the cost
of implementation of the ERP system ahead of delivery of anticipated savings,
start-up costs of the Taicang plant, and a lack of immediate growth prospects
for Chromium chemicals. While the key elements of the programme to bring about
step change improvements in the financial performance of all Elementis
businesses are expected to be implemented in the next 12 months, it is by no
means clear at this stage that Elementis will be able to improve operating
profit in 2004.

                                    - Ends -

 There will be an analyst conference call today at 1100 GMT on +44 1452 561 263
           With the reference Elementis. This call will be hosted by
     Geoff Gaywood, Chief Executive and Brian Taylorson, Finance Director.



Enquiries

Elementis                                                   +44 (0) 1784 227000

Geoff Gaywood            Chief Executive
Brian Taylorson          Finance Director
Hilary Reid Evans        Head of Corporate Communications


Brunswick                                                   +44 (0) 20 7404 5959

Andrew Fenwick
Chi Lo




                      This information is provided by RNS
            The company news service from the London Stock Exchange