Elementis upbeat on outlook after first half growth

Speciality chemicals and personal care company Elementis reported a “strong” financial performance improvement in its first half on Thursday, with profit before tax up 165%.

The FTSE 250 company said revenue was up 17%, or 12% on an underlying basis, from a Covid-19 impacted first half in 2020, to $452m, driven by improved industrial demand, customer restocking and currency tailwinds.

Adjusted operating profit for the six months ended 30 June was up 29%, or 21% on an underlying basis, to $54m, with strong operational performance and underlying revenue growth partially offset by cost increases.

Profit after tax of $28m, swinging from a loss of $51m in the prior year, was put down to a performance improvement and a $66m reduction in adjusting items.

Net debt of $415m was in line with the $408m it recorded at the end of December, as earnings growth and “disciplined” working capital management offset a $20m European Union state aid payment.

Its leverage ratio of 3.0x net debt-to-EBITDA was declining, and was forecast to reduce further during the second half.

“We have made a strong start to the year benefiting from the combination of focused strategy execution and improved industrial demand,” said chief executive officer Paul Waterman.

“While the significant demand recovery has triggered ongoing supply chain challenges and accelerating cost inflation across the globe, we are well positioned to manage these impacts.”

Waterman said that overall, the group was experiencing “encouraging” trading momentum, and was on track to deliver an improved financial performance and a reduction in leverage, in line with expectations.

“Elementis is focused on developing high quality businesses that have enduring competitive advantages in structural growth markets.

“In the coming years, as end markets continue to recover and our innovation, growth and efficiency strategy continues to be successfully executed, we are well positioned for material performance improvement that will support the delivery of our medium term financial ambitions.”

At 0855 BST, shares in Elementis were down 1.25% at 145.55p.