Elementis Has Cosmetics Boost as Ranks Built With Croda Hire

Elementis Plc, a British supplier of specialty chemicals, said growth in personal-care ingredients based on its clay-technology and natural oil products is continuing in the second half.

Elementis reported a 10 percent decline in first-half operating profit, yet the London-based company predicted an improved final six months of the year. Sales from its personal-care operations supplying ingredients to enhance the feel and performance of moisturizers jumped 23 percent.

“I can’t promise that it will be 23 percent growth again in the second half, but it should be healthy,” Finance Director Brian Taylorson said today in a phone interview.

Elementis is reaping the rewards of hiring executives from personal-care companies and suppliers, including one from Croda International Plc. Technologies based on Elementis’s hectorite clay and applied in industrial coatings are now being transferred to the personal-care market, Taylorson said.

Shares of Elementis advanced as much as 7.7 percent to 250.5 pence, the biggest intraday advance for five months. They traded at 245.7 pence as of 11:20 a.m. in London, valuing the business at 1.13 billion pounds ($1.73 billion).

Elementis’s value is being enhanced by this week’s takeover of Rockwood Holdings Inc.’s competing rheology business by Altana AG for $635 million, Taylorson said. Antitrust hurdles prevented Elementis from taking part in the process though it “would have loved” to own the asset, he added.

Upbeat Outlook

Elementis’s first-half sales declined to $388.2 million from $401.3 million, weighed down by a maintenance shutdown at a chromium division. Operating profit slipped to $72.8 million from $80.7 million.

Taylorson said Elementis is on track to meet analysts’ estimates for the year, adding that an increase to $80 million in operating profit in the second half “would be a big jump.” The average of analysts estimates collected by Bloomberg predicts an advance to about $154 million in earnings this year, from $142.7 million in 2012.

Elementis is seeking to leverage its rare hectorite mineral deposit in California, a white clay that’s the basis of many of its additives for moisturizers as well as high-performance coatings and oil and gas drilling solutions. The acquisition of Fancor in 2009 provided natural oils with nutritional benefits for face creams.

“We’re benefitting from being a small niche player” in personal care, Taylorson said. “We’re also benefitting from bringing in some guys last year who are more immersed in the sector than we have been and are coming with ideas and opportunities that are accelerating the business.”

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