Elementis Regulatory News (ELM)

Elementis plc - Trading update

Elementis plc (ELM.L, the "Company" or the "Group"), the Global Specialty Chemicals Company, today issues a trading update ahead of its interim results for the half year ending 30 June 2015, which will be announced on 28 July 2015.

Specialty Products continues to make solid progress in terms of leveraging its strong market positions and geographic diversity, and developing new and innovative products to solve our customers' formulary challenges. Market share and contribution margins have remained stable and trading in the first half of the year is anticipated to be in line with management's expectations in most of our key markets. However, temporary market dynamics experienced in the second quarter of the year will most likely negatively influence our full year result.

· As recent commentary from the oil sector confirms, there has been a further significant reduction in oil projects in North America and therefore drilling activity has been further curtailed. As a result, we now expect our sales of additives for the first half and the year as a whole to the oilfield drilling market to be at least 30 per cent lower than the previous year, driven by lower volumes.

· In coatings additives, the Group continues to make good progress in North America, where the uptake of the new additives line for decorative coatings from our New Martinsville facility is continuing to gain traction with customers. Sales to Latin America have also been robust, based on synergy projects from the previously acquired Watercryl business. In Europe, where underlying economic activity still remains subdued, Group sales for the first half of the year, on a constant currency basis, are expected to be ahead of the same period last year. However, additives sales in China have experienced a reduction in demand during the second quarter of the year and, while the Group still expects sales to be ahead of prior year for the year as a whole, Asia Pacific sales in the first half will be similar to the same period last year. Consequently, overall sales of coatings additives for the first six months of the year, on a constant currency basis, are expected to be at a similar level to the same period last year.

· In personal care, the business continues to expand through new product sales and investments into new geographies. However, sales in Latin America have been impacted by significant local currency weakness. This has resulted in the business opting to cease supplying to a number of applications where returns have fallen below an acceptable threshold. The business is taking decisive action to address this competitive dynamic and market share gains from new product introductions have helped to offset the Latin America shortfall. Therefore, sales for the first half will be similar to the strong 2014 first half results. Additionally, positive trends in other markets and geographies mean that full year sales, on a constant currency basis, are expected to be ahead of the previous year.

In Chromium, the market trends outlined in the Group's Interim Management Statement in April have continued through the balance of the first half of the year. As such, management expects the operating profit for the full year to be in line with the stated strategy for the business of "stable earnings and cash flow" and the first half result to be similar to the same period last year.

The Group's balance sheet remains in a strong position and is expected to show a net cash position at the end of the current year. While the Group remains confident in continuing to make progress in the medium term, the cumulative impact of short term issues arising during the second quarter, as described above, is that earnings per share for the full year are anticipated to be below the current range of market expectations.

ENDS

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