Sequential revenue improvement, FY 20 adjusted operating profit $81-83m
Significant reduction in net debt, anticipated to be under $415m
Elementis plc ("Elementis" or the "Group"), a global specialty chemicals company, today issues a trading update for the three months ended 31 December 2020.
Fourth quarter business performance
Fourth quarter revenue is expected to be ahead of the third quarter driven by improved volumes and largely stable pricing. Overall performance in the quarter is anticipated to be in line with management expectations, helped by tight cost management and supply chain efficiencies. As a result, adjusted operating profit for 2020 is expected to be $81-83m.
· Coatings has continued to perform well in Q4, albeit at lower levels than the prior year period, and remains on track to deliver improved operating margins versus the prior year.
· Personal Care sales remain materially lower than the prior year period in both Cosmetics and AP Actives, due to the continuation of COVID-19 related social and travel restrictions that have reduced consumption. Q4 performance is anticipated to be in line with Q3 levels.
· Talc volumes continued to recover, driven by improved long-life plastic demand for automotive applications and resilience in coatings. As a result, Q4 revenue is expected to be ahead of the prior year period.
· Chromium demand has sequentially improved, driven by increased demand for industrial applications such as leather tanning and metal plating. As a result, Q4 revenue is anticipated to be broadly in line with the prior year period.
· Energy continues to experience very weak market conditions with rig counts and activity levels remaining subdued.
In the fourth quarter we have continued to deliver against our Innovation, Growth and Efficiency strategy. For full year 2020 we launched 12 new products, captured over $30m of new business and delivered $15m of in year cost savings.
For 2021, whilst our new business and innovation pipelines are encouraging, we continue to face temporary demand challenges from COVID-19, particularly in Personal Care where we expect performance will recover when social and travel restrictions are lifted. As a result of the recently announced closure of our plant in Charleston, West Virginia, we have made further progress underpinning $10m of supply chain cost efficiencies, and our new AP Actives plant in India remains on track for mid-2021 start up.
Liquidity and balance sheet
As result of tight working capital management and disciplined capital expenditure, net debt* at the end of 2020 is anticipated to be under $415m, representing a significant reduction from $454m at the start of the year.
Elementis has a proven cash generative business model, with average operating cash conversion above 90% over the last 3 years, and the Group continues to operate with ample liquidity, with over $300m immediately available through committed lending facilities.
James Curran, Investor Relations Tel: 020 7067 2994
Martin Robinson Tel: 020 7353 4200
* Excluding IFRS 16 impact