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30 Oct 2015 07:00
ELEMENTIS PLC - Interim Management StatementELEMENTIS PLC - Interim Management Statement
PR Newswire
London, October 29
30 October 2015
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 2015.Commenting on the Group’s performance Group Chief Executive, David Dutro, said:
“I am pleased to report that despite challenging market conditions Group earnings per share for 2015 are expected to be in line with market expectations. The trends outlined at the time of our Interim Results announcement are expected to continue for the remainder of the year, with the well-publicised downturn in China and North American oilfield activity levels having the most pronounced impact on current period sales.
The strength and robustness of our business model remains in evidence, as both market share and contribution margins in Specialty Products have improved while Chromium margins, as expected, have remained relatively stable. This resilient margin performance is a clear indication that our customer value proposition remains in place and that the impact on demand is arising from the current macro-economic factors. Consequently, we expect positive performance to resume as end market demand returns.
In the meantime, we are taking measured action to reduce our cost base to a level that is more consistent with current activity levels and most of the benefit from this will be seen in 2016. Innovation remains a key factor in our performance and we will continue to make investments in the future growth of the business. These will include in decorative coatings, a further expansion of the New Martinsville facility, and in Asia Pacific, new investments in the water based dispersants arena, as well as in support of our IP protected, high value, castor wax based products.
Once again cash flow represents a strong component of our overall performance, which will continue to enable us to reward our shareholders with attractive returns via our progressive dividend policy, which includes our special dividend programme.”Specialty Products’ sales were 7 per cent lower compared to the same period last year on a constant currency basis, or 20 per cent lower on a reported basis. The remainder of this business commentary refers to constant currency sales.
In coatings, North America sales for decorative applications continued to show good progress as we benefited from the capacity expansion and product innovation from our new additives plant in New Martinsville. However sales to industrial applications continued to experience a slowdown in end-user exports on the back of the stronger US dollar. As a result, combined coatings sales in North America were 7 per cent lower than the same period last year. In Europe, sales of coatings additives were lower by 4 per cent for the quarter, but still ahead of the previous year by 1 per cent for the first nine months of the year. In Asia Pacific, sales for the quarter were 15 per cent lower as the recent slowdown in China continued to be a major influence, causing our customers to be cautious in their buying patterns. Additives sales to Latin America were 6 per cent lower due to the continuing economic weakness in Brazil. In personal care, sales for the quarter were 4 per cent lower than the previous year, as the business continued to be impacted by a reduction in sales in Latin America due to currency movements, as reported at the time of the Group’s Interim Results. The level of activity in the North American oil and gas drilling sector remained consistent with that experienced in the second quarter and hence sales for the third quarter were 47 per cent lower than the previous year.Chromium continued to perform in line with its strategy of delivering stable earnings and cash flow. In the current quarter, sales were 21 per cent below the same period last year as markets outside North America continued to be influenced by currency related pricing trends. In addition and as previously noted, sales of refractory grade oxide in North America have returned to more normal levels in 2015, having been particularly strong during 2014. In response to this the business has been able to leverage its flexible manufacturing platform and efficient operational base in order to offset the lower sales with lower operating costs and site optimisation projects, as well as a one-time benefit from the resolution of a legacy legal issue which we reported at the time of our Interim Results in July.As a consequence of changes in the geographic mix of profits, the Group’s 2015 tax rate is expected to fall to approximately 19 per cent.
A revised funding agreement was concluded during the quarter for the Group’s UK pension plan, based on the latest actuarial valuation as at 30 September 2014. As a result of this new agreement, the Group’s combined contributions across all of its retirement plans are expected to be less than $15 million per annum in each of the next three years. In 2015 total contributions will be approximately $23 million, so this represents a significant reduction in contributions going forward.The Group balance sheet remains in a robust position and strong operating cash flow continues to be a positive aspect of the Group’s performance. In addition, the net cash balance at the end of the year will benefit from the recent sale of a parcel of land at Corpus Christi, which generated after tax proceeds of approximately $15 million. Consequently the Group’s year end net cash balance is expected to be higher than the $64.2 million reported at the end of 2014.
END
| Enquiries | ||
| Elementis plcBrian Taylorson, Finance Director | Tel: +44 (0) 20 7067 2999 | |
| FTI ConsultingDeborah ScottMatthew Cole | Tel: +44 (0) 20 3727 1000 |
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