A 5 per cent increase in underlying operating profit to $144m, or 7 per cent at constant currency, made that possible. Adjusted operating margin of 19 per cent was up on last year, too, although down slightly on the first half; blame here lies on the seasonal coatings market and the well-flagged third quarter downturn in demand for additives used in North American shale drilling. That undid good work done earlier in the year and left annual sales there down 6 per cent. Still, they're back to monthly averages seen before the dip, which should improve returns. Overall, profits at the speciality division rose a fraction to $90.1m, driven by North America and Asia. An "opportunistic" approach in Europe meant sales there leapt 8 per cent in the second half, although finance director Brian Taylorson doesn’t expect a repeat in 2013.
A big drop in energy costs enabled double-digit profit growth at the smaller Chromium division, helped by demand from European aerospace customers and Chinese car makers.
Broker N+1 Singer expects 2013 adjusted pre-tax profit of $150m and EPS of 24¢ (from $141m and 23.3¢ in 2012).
|ORD PRICE:||231p||MARKET VALUE:||£1.05bn|
|TOUCH:||230-231p||12-MONTH HIGH:||245p||LOW: 155p|
|DIVIDEND YIELD:||2.2%||PE RATIO:||15|
|NET ASSET VALUE||106¢*||NET CASH:||$44m|
Elementis is growing both organically and through sensible acquisitions, and special dividends are set to be a regular feature. A forward PE ratio of over 14 isn’t cheap, but the shares still rate a hold.
Last IC view: Hold, 211p, 31 July 2012