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Elementis PLC ELM Interim Management Statement

  Elementis PLC (ELM) - Interim Management Statement

RNS Number : 4998P
Elementis PLC
26 October 2012




                                                                             

26 October 2012





Elementis plc  (ELM.L)  ("Elementis" or  the  "Group"), the  FTSE  250  Global 
Specialty Chemicals Company,  today issues its  Interim Management  Statement 
for the three months ended 30 September 2012.



Elementis continues  to benefit  from  its strategy  of supplying  high  value 
products and  technical  service  to  a broad  range  of  end  markets,  while 
progressively  expanding  its  portfolio  of  high  value  products  and   its 
geographic presence in high growth regions. This strategy continues to  enable 
the Group to deliver resilient earnings  in the current environment of  global 
economic uncertainty and dynamic end market demand.



Business highlights



Specialty Products

· Overall sales in Specialty Products, on a constant currency basis, were 2
per cent higher than the same period last year.

· North America coatings sales for the third quarter were 3 per cent  lower 
than the same  period last  year, largely  due to a  decline in  sales to  the 
construction sector, otherwise sales continued to show strong growth.  Overall 
we regard this as good progress against a strong comparative period. It is  of 
particular note that coatings sales to Latin America increased by 32 per cent.

· Asia Pacific coatings sales grew by 12 per cent as the business continued
to benefit  from its  leading market  position, strong  technical service  and 
broad product offering in the region.

· European coatings sales showed resilience in the face of a weak  economic 
climate, growing by 3 per cent, after adjusting for the weaker Euro.

· Sales in personal care were 18 per cent higher than the same period  last 
year, with  good growth  in all  major regions  of the  world, reflecting  the 
Group's strong niche position and innovative product offering in this  market, 
together with our investment in key industry personnel earlier in the year.

· In oilfield drilling, which year to date represents 15 per cent of sales,
the third quarter  saw a reduction  in demand reflecting  a slowdown in  shale 
drilling activity in North America and  a late start to the Canadian  drilling 
season. This combined with some short term inventory adjustments by the  major 
oil service companies, led  to sales in  the quarter being  23 per cent  lower 
than the previous year. However,  the underlying fundamentals for this  sector 
remain positive and the Group expects  to continue to benefit from  attractive 
growth rates going forward.



Chromium

· The  Chromium  business  has  continued to  utilise  its  flexible  North 
American manufacturing base to  optimise its product mix  in order to  deliver 
stable earnings and cash flow.

· Sales volumes  were 5  per cent  lower than  the same  period last  year, 
largely due to lower sales of chrome oxide for use in metal alloys in  Europe. 
However sales volumes for  the first nine  months of the  year are similar  to 
last year, reflecting a core  component of the strategy,  which is to run  the 
manufacturing facility at high utilisation rates.



Operating margins  in  both businesses  were  seasonally lower  in  the  third 
quarter than was reported for the first six months of the year, but this  does 
not reflect any structural changes in pricing or contribution margin.



Financial position and cash flow

Strong cash generation has continued to  be a key characteristic of the  Group 
during the third quarter and current  expectations are that the Group  balance 
sheet will show a net cash  position at the end of  2012 in the region of  $50 
million. As  previously announced,  in addition  to the  existing  progressive 
dividend, the Board intends to distribute up to 50 per cent of this amount  as 
a special dividend.



Following a financial restructuring to  enhance the utilisation of Group  cash 
flow, the  Group's  overall tax  rate  in 2012  is  likely to  be  lower  than 
previously indicated, at approximately 26 - 27 per cent.



Outlook

We continue  to see  multiple  opportunities to  grow our  Specialty  Products 
business  and  the  Group   is  continuing  to  invest   in  the  growth   and 
diversification  of  this  business.  This  is  demonstrated  by  the  recent 
completion of the Watercryl acquisition in Brazil and the new US facility that
will  produce  highly  innovative  and  patent  protected  products  for   the 
decorative coatings market. This new facility is expected to start  production 
by the end of the year.



Operating profit for the full year, although comfortably ahead of the previous
year, will  be  adversely  impacted  by the  temporary  slowdown  in  oilfield 
drilling. However, due to the lower  Group tax charge, full year earnings  per 
share is anticipated to be in line with market expectations.



                                     ENDS





Enquiries:

                                                   + 44  (0) 207  408 
        Elementis                                   9300
Brian Taylorson,  Finance         
Director                                            
                                                   + 44  (0) 207  831 
FTI Consulting                                      3113
Deborah Scott
Matthew Cole                                       









                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSUVSURUBARURA -0- Oct/26/2012 06:00 GMT
 
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