Elementis was the best-performing stock in the FTSE 350 last year, rising 170 per cent. But the share price didn’t quite keep pace with the chemical group’s operating profits, which leapt 183 per cent to US$102m (£62.53m) stripping out $77m of restructuring and other one-off costs in 2009). The global recovery and operational gearing are to thank: as demand for Elementis’s specialist additives recovered, almost half the $134m in extra revenues dropped through into profits.
The specialty-products division, which accounts for 70 per cent of profits, sells chemicals that improve the feel and flow of liquids, mainly to paint suppliers but also to companies that make moisturisers or drill for oil. All three markets grew strongly last year, but the stand-out performer was oil: a frenzy of shale-gas drilling in North America pushed volumes up 68 per cent.
Growth in the group’s chromium division was modest by comparison, but only because management shut a low-margin plant in Eaglescliffe in mid-2009. They were rewarded by a radical margin improvement from 7.6 to 17 per cent.
Following sharp upgrades, Brewin Dolphin expects adjusted pre-tax profits of $105m and EPS of 16.4¢ this year (2010: $93m and 14.8¢).
| ELEMENTIS (ELM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 134.7p | MARKET VALUE: | £605m | |
| TOUCH: | 134.5-134.7p | 12-MONTH HIGH: | 144p | LOW: 52p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 85¢* | NET DEBT: | 21% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 302 | 26.8 | 5.9 | 2.4 |
| 2007 | 300 | 36.2 | 7.6 | 2.7 |
| 2008 | 401 | 28.0 | 4.5 | 2.9 |
| (US$m) | (US$m) | US¢ | p | |
| 2009 | 564 | -48.4 | -12.9 | 2.9 |
| 2010 | 697 | 96.0 | 16.7 | 3.1 |
| % change | +24 | - | - | +7 |
Ex-div: 4 May Payment: 3 Jun *Includes intangibles of $338m, or 75¢ per share | ||||
