Elementis (ELM) nearly doubled capital expenditure last year, but the chemicals company generates so much cash it’s paying a chunky special dividend, in line with its promise to return half of year-end net cash back to shareholders. This time it’s an extra 4.79¢ (3.15p), increasing the dividend yield to over 3.5 per cent.
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).
ELEMENTIS (ELM) | ||||
|---|---|---|---|---|
| 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: | $44m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 401 | 28.0 | 4.5 | 2.90 |
| (US$m) | (US$m) | (US¢) | (p) | |
| 2009 | 564 | -48.4 | -12.9 | 2.90 |
| ¢ | ||||
| 2010 | 697 | 96.0 | 16.7 | 4.94 |
| 2011 | 761 | 162 | 27.8 | 7.00 |
| 2012** | 757 | 141 | 23.7 | 7.77 |
| % change | - | -13 | -15 | +11 |
Ex-div: 1 May Payment: 31 May *Includes intangible assets of $342.6m, or 76¢ per share **Excludes special dividend of 4.79¢ a share £1=$1.52 | ||||
