The North American operations at Elementis (ELM) are thawing with the US economy. The icy winter temporarily froze the group's oilfield and chromium businesses in January and February, disrupting production and transportation. Sales in the oilfield division finished the half down 15 per cent compared to the prior year, while chromium revenues were flat.
But these problems were offset by decent growth elsewhere. The coatings business, which sells additives that enhance the flow and feel of paint, grew 5 per cent, driven by market share gains in China and a solid performance in the US. And the personal care division, which supplies similar additives for cosmetics, is growing very fast - sales were up by more than a fifth during the first half. The whole additives business remains remarkably profitable, with operating margins of 20 per cent.
Finance director Brian Taylorson puts the group's performance down to 'self-help' measures as well as the patchy recovery in global demand. "Our strategy is based around creating our own growth opportunities such as acquisitions, targeted investments in sales teams and development of new products," he says.
A lower tax rate also helped boost the bottom line. That has encouraged broker N+1 Singer to raise its full-year EPS forecast to 25.1¢ (from 23¢ in 2013).
ELEMENTIS (ELM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 275p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 274.6 - 274.9p | 12-MONTH HIGH: | 301p | LOW: 227p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 119¢* | NET CASH: | $5m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 388 | 67.5 | 11.5 | 2.57 |
| 2014 | 400 | 72.4 | 12.8 | 2.70 |
| % change | +3 | +7 | +11 | +5 |
Ex-div: 10 Sep Payment: 3 Oct *Includes intangible assets of $383.4m, or 83¢ a share £1 = $1.7 | ||||
