Elementis profits fall on weak demand; cautious on coronavirus
Chemicals group Elementis said full-year adjusted operating profits fell due to weaker demand in "challenging" conditions as it warned of a cautious outlook due to the coronavirus.
The group said it was cautious on its short term outlook for 2020 "given the challenging market back drop, and the uncertainty around the wider impact of Covid-19" but forecast a stable performance supported by cost savings and new business opportunities.
"Overall progress in personal care, coatings and talc is expected to be offset by challenging market conditions in chromium," the company said.
Elementis, said its three production sites and sales offices in China had reopened and that there was potential for "some disruption" to customer demand. The country represents 15% of group sales.
Adjusted operating profit fell 7% to $123m as results were hit by declines in its chromium and energy businesses, weaker industrial production, destocking in its coating unit, and competitive pressures in its AP Actives business.
Statutory operating profits were up 19% to $101m as growth in Elementis' Talc wing and its self-help actions offset other impacts.
Revenue from continuing operations was up 6% at $874m, also driven by contributions from the recently acquired Talc business, which was also on track to deliver revenue synergies of $20m - £25m by 2023.
Elementis highlighted its "strong" operating cash conversion of 130%, driven by "sustainable working capital reductions" and capital discipline. Net debt was reduced by $44m to $454m.
The FTSE 250 firm upped its ordinary dividend from 8.40 cents per share to 8.55 cents, reflecting its strong underlying cash generation throughout the year and its "attractive" medium-term prospects.
At 0935 GMT, Elementis shares were up 1.8% at 99.90p.
(Writing by Frank Prenesti; Editing by Michele Maatouk)