Elementis's bottom line hit by impairment charges in 1H
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16:23 04/08/22
Elementis swung to a first half loss as the Covid-19 pandemic hammered the company's top line and led management to book big impairments for its energy and Talc assets.
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But management sounded a confident note on the outlook, pointing to the 'self-help' initiatives that were already underway and a raft of planned new product launches.
For the six months ending on 30 June, the specialty chemicals and personal care business reported a 14% drop in sales to reach $387m as Covid-19 weighed on volumes in its industrial end markets.
It also incurred in non-cash goodwill impairment charges of $60m.
As a result, on a statutory basis, the group's fell into an after tax loss of $51m, against $40m in profits for the comparable year ago period.
However, the company described the performance of its Coatings and Personal Care business as "resilient", helped by cost savings, including for raw materials and steady price/mix.
On costs, management said $10m of in-year savings were already in the pipeline, alongside accelerated progress on its $15m medium-term efficiency programme, and a further $5m expected from a 2019 restructuring of its organisation.
An additional $10m of supply chain savings were now also expected to materialise sooner, in 2021.
Net debt also reduced, from $509m one year back to $453m, which was roughly in line with estimates from UBS analyst Andrew Stott.
That left the company's leverage at 3.1 times its earnings before interest, taxes, depreciation and amortisations, versus a recently relaxed debt covenant ceiling of 3.75 times.
Immediately available group liquidity at period end stood at over $300m.
According to the company, the businesses' fundamentals remained "strong" and the company was well-positioned for sustainable growth, remaining on track for more than $30m of new business opportunities and with 26 new product launches scheduled for over 2020.
Elementis also unveiled new 2030 targets for green house gas emissions, energy efficiency, and improved water and waste management.
As of 0900 BST, shares of Elementis were 3.73% lower to 76.05p.