Elementis targeting further cost cuts, sees 'strong' medium-term returns

Elementis announced plans on Tuesday to deliver a further $15m of cost savings by 2022, as it said it expects to deliver "strong, sustainable" returns over the medium term.

In an update ahead of its capital markets day, the speciality chemicals business said it plans to deliver an adjusted operating profit margin of 17% in the medium term, along with operating cash conversion of at least 90% a year and financial leverage of less than 1.5x net debt/EBITDA.

Chief executive officer Paul Waterman said: "Elementis has made significant progress over the last three years to transform its portfolio and to re-position itself as a premium performance additives company with advantaged positions in growing markets.

"Coming through a challenging market backdrop in 2019, our medium term priorities are clear. The execution of our innovation, growth and efficiency strategy will address our customers' most challenging problems whilst driving sustained value creation. We are excited about the potential at Elementis for material growth opportunities and margin improvement alongside strong cash generation."

In addition to the $10m cost savings being delivered this year, Elementis said it was also aiming to deliver a further $15m of savings by 2022. This is comprised of about $5m organisational efficiencies and $10m global supply chain savings from network efficiency and optimising third party production.

"A key enabler of these savings will be the further digitisation of Elementis, as we create a simpler and faster operating model and IT infrastructure," it said.

At 1030 GMT, the shares were up 1.9% at 175.20p.