Chemicals group Elementis has moved into its second half with the wind behind it after these forecast-beating half-year figures. Demand from the coatings, oilfield and personal care industries swelled operating profit at the core specialty products division by 32 per cent to $49.4m (£30.3m) and the order book looks healthy, too.
Oil - shale gas drilling in particular - accounts for about 12 per cent of the division’s sales. Elementis supplies the industry with additives that make it easier to get drilling debris out of the ground and, with a surge in this type of activity, growth prospects are good. Additives used in paints and hand lotions are also in demand, especially in North America where sales rose 15 per cent. Meanwhile, strong global demand for chrome chemicals helped the chromium business deliver 10 per cent sales growth and a 48 per cent increase in operating profit - even after leaving out a $2.4m insurance settlement. Impressive cash flow generation halved net debt to $54m and a decision by the European Commission to repeal a €23.4m fine means the company will likely be cash positive by end-2011.
UBS expects full-year pre-tax profit of $126m, giving EPS of 20¢ (2010: $96m/17¢).
ELEMENTIS (ELM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 163p | MARKET VALUE: | £733m | |
| TOUCH: | 163-164p | 12-MONTH HIGH: | 189p | Low: 78p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 93¢* | NET DEBT: | 13% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 358 | 46.2 | 7.30 | 2.34 |
| 2011 | 396 | 70.6 | 10.8 | 2.34 |
| % change | +11 | +53 | +48 | - |
Ex-div: 7 Sep Payment: 7 Oct *Includes intangible assets of $340m, or 76p per share £1=$1.63 | ||||
