Elementis earnings drop but dividend held as self-help continues
Elementis posted full year results showing a 22.5% fall in operating profits as revenues dipped and currency movements hit margins, with management focused on self-help measures to steer through the uncertain economic backdrop.
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On calendar year revenues of $659.5m, which were down 2.6% on the previous year, operating profits slid to $94.2m from $121.5m in 2015.
Adjusted profit before tax fell 22% to $89.7m and diluted adjusted earnings dropped to 16.8 cents per share, benefiting slightly from a lower tax rate as anticipated, with statutory basic EPS tumbling 28% to 14.7 cents.
But cash generation remained strong, the final dividend was maintained at 5.75 cents per share, with a slightly larger special dividend proposed of 8.35 cents, meaning the total payout for the year edged up to 16.8 cents from 16.45 the prior year.
Looking at the business by division, Energy was the major drag due to the oil price slump, with sales down 16% but an improvement of 15% in the second half compared to the first as prices rebounded somewhat.
Progress was reported overall in the Specialty Products arm, with constant currency sales up 3% thanks to an 8% rise in the second half.
The strong US dollar and low oil price hit the Chromium segment, with sales down 7% to $168.8m.
Coatings was up 4% for the year, with 6% growth in Asia, while Personal Care rose 14%, with H2 up 23% year on year.
Looking forward, chief executive Paul Waterman said he could see "significant opportunities" for Elementis even though the economic environment is likely to continue to be uncertain.
"However, the management team is focused on 'self help' to improve performance, whatever the market environment," he said.
He said major progress was made last year to position Elementis for future growth.
"Elementis has many strengths - high value propositions in Coatings, Energy and Personal Care, a material and growing position in China and an advantaged, cash-generative Chromium business in North America.
"We are making progress with our 'Reignite Growth' strategy, outlined in November 2016, that focuses on pursuing the best growth opportunities, supply chain transformation, innovation and a culture of high performance."
Shares in Elementis were down 4% to 286.5p by 1000 GMT on Wednesday.
Broker Numis said the outlook was encouraging, but "Energy and Chromium continue to pose risks to forecasts, and market conditions in EMEA remain soft".