24th Feb 2015 10:57
LONDON (Alliance News) - Shares in Elementis PLC were trading lower on Tuesday after the company posted a rise in pretax profit and sales in 2014 and hiked its dividend, but said the strong performance in its specialty products business it being held back by flat trading in its chromium arm and weakness in its surfactants unit.
The FTSE 250-listed specialty chemicals company's shares were down 2.0% to 278.75 pence on Tuesday, one of the worst performers in the FTSE 250, after it said its pretax profit for the year to the end of December was USD141.9 million, up from USD136 million last year.
Sales for the year rose to USD790.4 million, compared to USD776.8 million last year, as a strong performance in its specialty products unit was offset to a degree by the performances in its chromium and surfactants businesses, though Elementis said both performed in line with its expectations.
Specialty products revenue in 2014 rose to USD519.7 million from USD502.8 million last year. Revenue in the division was not impacted by currency movements over the year, as a small positive influence from euro exchange rates in the first nine months was offset by the fall of the euro against the dollar in the fourth quarter.
Coating additives sales for the group improved in North America, Europe and Asia Pacific on the back of new product sales. North America sales rose 7% year-on-year, boosted by new decorative coatings market products and by an improving underlying economy. Europe sales were up 2% year-on-year, though a good first nine months was offset in part by a marked decline in demand in the fourth quarter amid renewed concerns about the health of the European economy. Asia Pacific sales were up 5%, boosted by its Chinese business and higher sales across the rest of the region.
But coating additives sales fell in Latin America, hit by weak underlying economic activity and adverse currency fluctuations, Elementis said.
Oilfield sales returned to growth in the second half, following a slow start to the year impacted by poor weather conditions in North America, amid robust activity in shale, deep offshore and seasonal Canadian drilling trade.
Personal care sales rose 8% year-on-year, with strong growth in Latin America and Asia Pacific but a downturn in Europe in the final quarter.
Chromium revenue was broadly flat for the year at USD216.5 million against USD214.8 million a year earlier. Sales in North America rose 14% year-on-year in the division, despite a slow start to the year owing to weather conditions. The sales were driven by strong demand for refractory grade oxide and chromic acid for timber treatment and stabilising sales of chrome sulphate.
But owing to the strategy of utilising the North American operating base for the division, higher North America sales meant sales in Europe and Asia Pacific were both held back.
Revenue in Elementis' surfactants business dropped in 2014, falling to USD67.1 million from USD72.2 million, hit by an 11% drop in volumes over the year. Elementis said the fall in volume was in line with its strategy to prioritise activity its facility in Delden in the Netherlands to produce higher-margin additives for the specialty products business, subsequently reducing surfactants volumes.
The group hiked its dividend for the year, with its total dividend rising 11% to 15.40 cents from 13.93 cents in 2013. The total dividend was driven higher by a 19% hike to its special dividend payment for the year, up to 6.95 cents from 5.86 cents last year.
The dividend hike was made on the back of the company's net cash position at year-end, which came in at USD64.2 million, ahead of previous guidance.
"Elementis delivered another year of solid financial performance," said Elementis Chief Executive David Dutro. "This continuous improvement has been achieved despite uneven regional and market growth, which further validates our strategy and underlines the resilience of Elementis."
"Although economic uncertainties in Europe and evolving dynamics in the oilfield sector remain evident, the current year has started on a solid footing, and we are confident that the group will make further progress in the coming year," Dutro added.
N+1 Singer keeps its forecasts largely unchanged on Elementis following the results, saying the company has confirmed a solid performance for 2014. The broker says the results confirm another solid year for the company, with progress made in spite of a challenging fourth quarter in Europe.
By Sam Unsted; [email protected]; @SamUAtAlliance
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