31st Oct 2014 11:07
LONDON (Alliance News) - Shares in Elementis PLC were trading higher on Friday after the company said it expects its full-year earnings to meet market expectations on a solid performance across the group.
Elementis shares were up 3.4% to 265.70 pence in mid-morning trade, making it one of the best performers in the FTSE 250.
The specialty chemicals company said it remains confident it will perform well in its core markets over the year and expects full-year earnings per share to be in line with market expectations.
The group said Specialty Products sales were up 6% in the third quarter to the end of September, with sales in its coatings, personal care and oil and gas drilling divisions all rising by that percentage.
Coatings sales were up 5% in North America, boosted by growing sales from the new decorative additives plant in New Martinsville and defoamer sales related to the acquisition of Hi-Mar Specialty Chemicals LLC for USD33 million in February 2013. Sales were up 11% in Europe, or 8% excluding currency effects, on the back of new product launches and additional sales in Eastern Europe and the Middle East.
Coatings sales in Asia Pacific rose 4%, and Latin America sales were broadly flat as progress in integration the Watercryl Quimica Ltd business in Brazil was offset by weak demand on the back of difficult economic conditions in the region.
Personal care sales rose 6% in the quarter on the back of new products and a strong performance in emerging markets. Sales growth for the first nine months in the unit is now 16%, Elementis said.
Sales to the oil and gas industry were also up 6%, boosted as the business stabilised following a slower start to the year.
Its operating margin in the unit was slightly lower year-on-year owing to the impact of the start-up phase at the recently completed New Martinsville plant, where production activity is building up in line with expectations, Elementis added.
Its Chromium arm also is performing in line with expectations, with third quarter sales rising 2% and operating profit at a similar level to the year before. The business saw solid demand in the North American market, with an improvement in the performance of its leather tanning business increasing its percentage of sales to the region from the unit to 68%.
The group also said its cash flow remains positive and said it expects to have a net cash balance of at least GBP40 million at the end of the year.
"Elementis is pleased to report another resilient performance that further demonstrates our ability to deliver profitable growth in an economic environment that continues to be challenging," said Chief Executive David Dutro.
"Our recent investments in new products and geographies combined with our strong market positions and customer relationships mean that we have a broad base of growth opportunities," Dutro added.
Broker Jefferies said that though the Elementis guidance on its cash position at year end was slightly off market expectations, the statement from Elementis indicates "another consistent performance" from the company.
It said the 6% growth in Elementis's specialty products line was in line with expectations, as was the broadly flat guidance on earnings for its Chromium business.
Jefferies added the cash balance guidance of around USD40 million per year indicates Elementis will pay a special dividend of around 4.3 cents per share this year, in line with its programme to distribute around half of its year-end cash to shareholders. The figure is slightly lower than the 4.79 cent special dividend it paid last year.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Elementis