25th May 2006 07:01
Cookson Group PLC25 May 2006 25 May 2006 AGM TRADING STATEMENT Cookson Group plc ("Cookson" or the "Company"), a leading materials sciencecompany, releases the following statement regarding current trading ahead oftoday's Annual General Meeting. Our main end-markets and general trading conditions have continued to evolve inline with the guidance given in our Preliminary Results announcement on 14 March2006. Furthermore, the benefits of the restructuring and cost reductioninitiatives undertaken over the past two years continue to materialise in linewith our expectations. Whilst metal market prices (notably for tin, gold and silver) have risen sharplyin recent weeks, these costs are typically "pass through" in nature such thatthe principal impact is to increase reported revenues in our Assembly Materialsand Precious Metals businesses. Accordingly, our trading results for the year to date are progressing in linewith our previous expectations; with our performance well ahead of theequivalent period last year. Ceramics Global steel production, the most important end-market for the Ceramicsdivision, grew 6% in the first four months of 2006 compared to the same periodlast year. This continues to be driven by strong growth in China (18%) and India(21%), with production in NAFTA and the European Union being broadly flatyear-on-year. Starting at the end of last year and continuing into January2006, we have implemented a new organisational model and reduced non-productionheadcount by over 100 people in the US and Europe. The benefit of these costreduction measures is now being fully reflected in the trading results. Therelated restructuring charge was included in last year's financial statements. Electronics As expected, end-market growth in our electronics markets is ahead of global GDPbut there is some softness in automotive markets. The transition to lead-freesolder is continuing to benefit the Assembly Materials sector with 37% of solderrevenues in the first quarter now being in lead-free products, up from 32% inthe fourth quarter of 2005. Market penetration of the new low silver, lead-freeproduct is also encouraging. There has been no repeat of the significant copperdamascene de-stocking issue which negatively impacted the first quarter of 2005. Precious Metals In the US there is evidence of firming in retail markets and our results in thisregion are also benefiting from the restructuring implemented in the secondquarter of 2005. In Europe, retail demand for jewellery remains weak. Thefirst phase of the turnaround strategy in the UK is being implemented throughthe enhancement of our call centre and internet sales capabilities whilstheadcount has been reduced at the trade counters. Our European operations as awhole are now trading profitably, with those in the UK recording a break-eventrading result for the year to date. The very significant recent increases in the price of gold and silver are havinga mixed impact on our businesses. Because the ownership of the precious metalwe use is passed directly from consignors to the customer, we are not directlyexposed to the price volatility. Whilst higher precious metal prices typicallydampen retail demand for jewellery in the short-term it increases activity inour precious metals recycling operations as the holders of precious metal seekto crystallise the increased value of their holdings. While volatility inprecious metals markets continues, the overall impact on the division remainsuncertain. Discontinued Operations Formal regulatory approval for the sale of the Laminates business was recentlyobtained and the transaction was completed on 21 April 2006 for a considerationof US$91 million (£51 million). During the period prior to disposal, theLaminates business had been treated for accounting purposes as a business "heldfor sale" and its trading results will be included within "discontinuedoperations". As a consequence, no depreciation charge is recorded for theperiod up to disposal. Following the restructuring of this business undertakenin 2005, the Laminates sector traded profitably this year in the period up todisposal. Disposals On 31 March 2006, the sale of the Ceramics Fibres business was completed forcash proceeds of US$23 million (£13 million). With the completion of the saleof the Laminates business, this brings the total proceeds from disposals to £114million, ahead of our target of £100 million by the end of 2006. Outlook Based on general market conditions and our trading results for the first fourmonths of the year to date, we continue to expect an improvement in the overallperformance of our operations in 2006. Further announcements A pre-close period trading statement will be issued at the end of June, withInterim results for the six months ending 30 June 2006 being announced on 3August. About Cookson Group plc Cookson Group plc is a leading materials science company operating on aworldwide basis in Ceramics, Electronics and Precious Metals markets. The Ceramics division is the world leader in the supply of advanced flow controlrefractory products and systems to the global steel industry and a leadingsupplier of specialist ceramic products to the glass and foundry industries. Itis also the regional leader in the US, UK and Australia in the supply andinstallation of monolithic refractory linings. The Electronics division is a leading supplier of advanced surface treatment andplating chemicals and assembly materials to the automotive, construction andelectronics markets. The Precious Metals division is the leading supplier of fabricated preciousmetals (gold, silver, platinum, etc.) to the jewellery industry in the US, theUK, France and Spain. Products include alloy materials, semi-finished jewellerycomponents and finished jewellery. For further information please contact:Shareholder/analyst enquiries:Nick Salmon, Chief Executive Cookson Group plcMike Butterworth, Group Finance Director Tel: + 44 (0)20 7822 0000Isabel Vilela, Investor Relations Manager Media enquiries:John Olsen Hogarth Partnership Tel: +44 (0)20 7357 9477 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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