Last checked at 20 Sep 2023 12:09
London, 20 September 2023
Elementis plc
Response to open letter from Franklin Templeton
The Board of Elementis plc (the "Company" or "Elementis") notes the open letter from Franklin Mutual Advisers ("Franklin"), published today, in which Franklin requests the Board to initiate an immediate sale of the Company.
The Board engages with and welcomes feedback from all shareholders and is focused on delivering value for stakeholders.
The Board has held a series of discussions with Franklin to understand their view and consider their request. After careful consideration, with the support of its advisors, the Board does not consider an immediate sale of the Company to be in the best interests of its shareholders and is issuing this announcement to clarify its response.
The Board agrees with Franklin's comments on Elementis' attractive assets
The Board notes and agrees with Franklin's comments about Elementis' attractive assets. In particular, the comments about our healthy market positions, strong gross margins that demonstrate the premium nature of our products and potential for upside in a cyclical recovery alongside substantial operational improvement initiatives.
Pure specialty chemicals business on track to achieve full potential
Following the successful divestment of the Chromium business which completed in January 2023, Elementis is a pure play specialty chemicals business focused on adding value by making our customers' formulations look, feel, and perform better. Elementis is now a higher growth, higher margin, less cyclical and less carbon intensive business.
This focus on advantaged, high value products will enable us to deliver higher quality earnings and margins, with lower volatility, and generate significant shareholder value.
We continue to make progress towards our medium-term goal of 17% adjusted operating margin. As a cash generative business, combined with the sale of our Chromium business, we continue to make progress towards our target of below 1.5x net debt / EBITDA.
Interim results demonstrate resilient performance alongside ongoing execution of the strategy
In our 2023 interims we delivered resilient results in challenging macro-economic conditions that have seen many other specialty chemicals companies downgrade expectations for 2023. Alongside this resilient performance Elementis continues to execute against its strategy which is built around the three pillars of Innovation, Growth and Efficiency.
Board focus on driving value for shareholders
The Board regularly views the Company's strategic alternatives with its financial advisors. Our Board does not believe that Franklin's request to initiate an immediate sale of the Company is currently in the best interests of its shareholders given the substantial value still be to be realised.
We look forward to updating shareholders on our strategic progress, including the next wave of growth and efficiency initiatives, at our upcoming Capital Markets Day on 14 November 2023.
Enquiries
Elementis plc
Paul Waterman, Chief Executive Officer
Ralph Hewins, Chief Financial Officer
Eva Hatfield, Head of Investor Relations Tel: +44 7553 340 380
Teneo
Martin Robinson Tel: +44 (0) 20 7353 4200
Olivia Peters Email: elementis@teneo.com