Trading Statement
Cookson Group PLC
25 May 2006
25 May 2006
AGM TRADING STATEMENT
Cookson Group plc ('Cookson' or the 'Company'), a leading materials science
company, releases the following statement regarding current trading ahead of
today's Annual General Meeting.
Our main end-markets and general trading conditions have continued to evolve in
line with the guidance given in our Preliminary Results announcement on 14 March
2006. Furthermore, the benefits of the restructuring and cost reduction
initiatives undertaken over the past two years continue to materialise in line
with our expectations.
Whilst metal market prices (notably for tin, gold and silver) have risen sharply
in recent weeks, these costs are typically 'pass through' in nature such that
the principal impact is to increase reported revenues in our Assembly Materials
and Precious Metals businesses.
Accordingly, our trading results for the year to date are progressing in line
with our previous expectations; with our performance well ahead of the
equivalent period last year.
Ceramics
Global steel production, the most important end-market for the Ceramics
division, grew 6% in the first four months of 2006 compared to the same period
last year. This continues to be driven by strong growth in China (18%) and India
(21%), with production in NAFTA and the European Union being broadly flat
year-on-year. Starting at the end of last year and continuing into January
2006, we have implemented a new organisational model and reduced non-production
headcount by over 100 people in the US and Europe. The benefit of these cost
reduction measures is now being fully reflected in the trading results. The
related restructuring charge was included in last year's financial statements.
Electronics
As expected, end-market growth in our electronics markets is ahead of global GDP
but there is some softness in automotive markets. The transition to lead-free
solder is continuing to benefit the Assembly Materials sector with 37% of solder
revenues in the first quarter now being in lead-free products, up from 32% in
the fourth quarter of 2005. Market penetration of the new low silver, lead-free
product is also encouraging. There has been no repeat of the significant copper
damascene de-stocking issue which negatively impacted the first quarter of 2005.
Precious Metals
In the US there is evidence of firming in retail markets and our results in this
region are also benefiting from the restructuring implemented in the second
quarter of 2005. In Europe, retail demand for jewellery remains weak. The
first phase of the turnaround strategy in the UK is being implemented through
the enhancement of our call centre and internet sales capabilities whilst
headcount has been reduced at the trade counters. Our European operations as a
whole are now trading profitably, with those in the UK recording a break-even
trading result for the year to date.
The very significant recent increases in the price of gold and silver are having
a mixed impact on our businesses. Because the ownership of the precious metal
we use is passed directly from consignors to the customer, we are not directly
exposed to the price volatility. Whilst higher precious metal prices typically
dampen retail demand for jewellery in the short-term it increases activity in
our precious metals recycling operations as the holders of precious metal seek
to crystallise the increased value of their holdings. While volatility in
precious metals markets continues, the overall impact on the division remains
uncertain.
Discontinued Operations
Formal regulatory approval for the sale of the Laminates business was recently
obtained and the transaction was completed on 21 April 2006 for a consideration
of US$91 million (£51 million). During the period prior to disposal, the
Laminates business had been treated for accounting purposes as a business 'held
for sale' and its trading results will be included within 'discontinued
operations'. As a consequence, no depreciation charge is recorded for the
period up to disposal. Following the restructuring of this business undertaken
in 2005, the Laminates sector traded profitably this year in the period up to
disposal.
Disposals
On 31 March 2006, the sale of the Ceramics Fibres business was completed for
cash proceeds of US$23 million (£13 million). With the completion of the sale
of the Laminates business, this brings the total proceeds from disposals to £114
million, ahead of our target of £100 million by the end of 2006.
Outlook
Based on general market conditions and our trading results for the first four
months of the year to date, we continue to expect an improvement in the overall
performance of our operations in 2006.
Further announcements
A pre-close period trading statement will be issued at the end of June, with
Interim results for the six months ending 30 June 2006 being announced on 3
August.
About Cookson Group plc
Cookson Group plc is a leading materials science company operating on a
worldwide basis in Ceramics, Electronics and Precious Metals markets.
The Ceramics division is the world leader in the supply of advanced flow control
refractory products and systems to the global steel industry and a leading
supplier of specialist ceramic products to the glass and foundry industries. It
is also the regional leader in the US, UK and Australia in the supply and
installation of monolithic refractory linings.
The Electronics division is a leading supplier of advanced surface treatment and
plating chemicals and assembly materials to the automotive, construction and
electronics markets.
The Precious Metals division is the leading supplier of fabricated precious
metals (gold, silver, platinum, etc.) to the jewellery industry in the US, the
UK, France and Spain. Products include alloy materials, semi-finished jewellery
components and finished jewellery.
For further information please contact:
Shareholder/analyst enquiries:
Nick Salmon, Chief Executive Cookson Group plc
Mike Butterworth, Group Finance Director Tel: + 44 (0)20 7822 0000
Isabel Vilela, Investor Relations Manager
Media enquiries:
John Olsen Hogarth Partnership
Tel: +44 (0)20 7357 9477
This information is provided by RNS
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