Elementis plc (LON: ELM), a global specialty chemicals company, has issued a trading update for the three months ended 30th September 2019.
Whilst the slowdown in broader macroeconomic conditions continues, self-help actions are anticipated to result in an improved second half performance, broadly in line with expectations. The Group’s strong free cash generation continued in Q3.
The Talc integration is now complete with functional teams embedded and delivery of synergies on track. The Group remains focused on executing its plans to transform Coatings, grow Personal Care and expand Talc. This strategy, supported by self-help measures focused on cost efficiency and cash delivery will provide a robust financial platform to deliver future growth and shareholder value creation.
Business performance
· Personal Care had a steady third quarter with solid performance in cosmetics and further sequential volume improvement in anti-perspirant actives, with margins impacted by tariffs. We continue to make progress on new product launches targeting the skin care market.
· In Coatings, demand conditions were in line with expectations. Whilst activity modestly improved in the North American and Asian architectural markets, industrial coatings demand remained sluggish across all geographies. Margins were resilient supported by cost savings, new product launches and price/mix improvements.
· In Talc performance was in line with expectations with strong demand for high value industrial applications such as technical ceramics and coatings, offsetting weak plastics. A much improved second half performance continues to be expected driven by new business, cost synergies and nickel sales phasing.
· Whilst Energy is a small part of Elementis, performance was weaker than expected due to a further slowdown in North American drilling activity. As a result, second half performance is anticipated to significantly decline on the first six months.
· In Chromium, pricing in our rest of the world operations further weakened, reflecting lower global industry capacity utilisation and increased competitive intensity. Performance in North America, where our operations enjoy significant structural advantages, has remained relatively robust. As a result, performance in the second half is anticipated to be broadly in line with the first six months of 2019.
Commenting on the performance, Elementis plc CEO, Paul Waterman said,
“Whilst market conditions remain challenging, overall performance in Personal Care, Coatings and Talc has been in line with expectations due to our self-help actions. Although there are no signs of improvement in global economic conditions, the fundamentals of our business remain strong. We are confident about our significant medium term innovation, growth and efficiency opportunities. This will be the focus of our Capital Markets Day in November.”
