30th Oct 2015 07:33
LONDON (Alliance News) - Elementis PLC Friday said its earnings for the full year should be in line with expectations as the trends experienced in the first half of the year have continued, despite sales being down compared to last year.
David Dutro, chief executive of the global chemical security company, said: "I am pleased to report that despite challenging market conditions group earnings per share for 2015 are expected to be in line with market expectations."
"The trends outlined at the time of our interim results announcement are expected to continue for the remainder of the year, with the well-publicised downturn in China and North American oilfield activity levels having the most pronounced impact on current period sales," he added.
Importantly, Dutro said cashflow has continued to perform well which will allow it to "reward our shareholders with attractive returns via our progressive dividend policy," including its special dividend programme.
The chief executive said its Speciality Products division has increased its market share and contribution margins whilst its chromium margins have "remained relatively stable" since the end of June.
"This resilient margin performance is a clear indication that our customer value proposition remains in place and that the impact on demand is arising from the current macro-economic factors. Consequently, we expect positive performance to resume as end market demand returns," said Dutro.
However, sales in the third quarter at the Speciality Chemical division have fallen by 7% year-on-year on a constant currency basis and 20% on a reported basis. Chromium sales were down 21% year-on-year but in line with expectations.
The company is focusing on reducing its cost base but said most of the benefits won't be felt until 2016, and Dutro said there would still be investment in growth.
"These (investments in growth) will include in decorative coatings, a further expansion of the New Martinsville facility, and in Asia Pacific, new investments in the water based dispersants arena, as well as in support of our IP protected, high value, castor wax based products," said Dutro.
Elementis is expecting its cash balance to be higher at the end of 2015 than the USD64.2 million held at the end of 2014.
"The group balance sheet remains in a robust position and strong operating cashflow continues to be a positive aspect of the group's performance. In addition, the net cash balance at the end of the year will benefit from the recent sale of a parcel of land at Corpus Christi, which generated after tax proceeds of approximately USD15.0 million," said Dutro.
By Joshua Warner; [email protected]; @JoshAlliance
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