Elementis plc ("the Company") today issues its Interim Management
Statement for the period ended March 31, 2009 in relation to the
Company and its subsidiaries ("the Group").
Trading for the first three months of the year has continued to
experience significantly lower levels of demand following the sharp
downturn that occurred towards the end of 2008. In Specialty Products
sales volumes, excluding Deuchem which was acquired in July 2008,
were 33 per cent lower than in the previous year with European order
patterns particularly depressed. Nevertheless, overall contribution
margins and market share remain stable. In Asia, Deuchem sales have
shown an improving trend during the period due to demand in the
Chinese domestic market. In Chromium the strategic review and
consultation process announced in February, relating to the UK
facility, is progressing and the Company expects to announce the
outcome before the end of June 2009. Sales volumes in the first three
months of 2009 for Chromium's remaining US based business were 53 per
cent lower than the same period last year.
The Group hedges its currency exposures by entering into forward
contracts, normally during the third quarter of the previous year.
The sharp downturn in demand that occurred at the end of 2008 and the
continuing low sales volumes experienced in the first part of 2009 is
likely to result in the currency hedges that were taken out for the
current year exceeding the actual currency exposure in the Group,
particularly for the first half of the year. If the current level of
Group sales were to continue, the first half operating profit would
be reduced by approximately £4.7 million due to this effect.
Market expectations assume some improvement in demand patterns during
the remainder of 2009 and, while the Group is well positioned to
benefit from the eventual economic recovery, the current trading
environment continues to make it difficult to predict the timing of
any such recovery. In the meantime, the Group has taken actions to
reduce costs in order to partially mitigate the impact that lower
than expected sales volumes will have on operating margins.
The Group remains well financed, with existing bank facilities not
due for renewal until 2011.
Elementis 020 7408 9300
David Dutro, Group Chief Executive
Brian Taylorson, Finance Director
Financial Dynamics 020 7831 3113
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