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Elementis future 'never brighter'

RESULTS: Last year was a record one for Elementis and the company's bosses are confident they can keep that kind of performance going through 2012
February 28, 2012

All the work done building up Elementis over the past few years has been worth it. The chemicals company made more money than ever in 2011 and operating margins are better than before the economic slump in 2009. Starting the current financial year on a "solid footing" bodes well.

IC TIP: Buy at 157p

Growth came from both the main divisions - speciality products and chromium - driving underlying operating profit up a third to $137m. There was even something for income seekers as strong cash flow allowed a 42 per cent hike in the dividend and the return of $34m in fines by the European Commission took the group to a net cash position at the year-end.

Diverse end markets like aerospace and timber treatment fired up the chrome chemicals business, where a seven-point increase in operating margins to 24 per cent helped drive profits up by over a half to $56.1m. Speciality products did well, too. Underlying sales there grew 10 per cent to $450m and, with operating margins rising to 19.9 per cent, up from 17.5 per cent, this pushed operating profits up a quarter to $89.7m. Selling additives to the oilfield business proved lucrative, increasing by a third. "Shale has been great for us," admits chief executive David Dutro after revealing growth there of 58 per cent.

Broker UBS expects adjusted EPS to increase from 21.2¢ to 23¢ in 2012.

ELEMENTIS (ELM)

ORD PRICE:157pMARKET VALUE:£706m
TOUCH:156-157p12-MONTH HIGH:189pLOW: 105p
DIVIDEND YIELD:2.8%PE RATIO:9
NET ASSET VALUE:100¢*NET CASH:$26.2m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2007300367.62.70
2008401284.52.90
($m)($m)(¢)(p)
2009564-48-12.92.90
   ¢
20106979616.74.94
201176116227.87.00
% change+9+69+66+42

Ex-div: 2 May

Payment: 1 Jun

*Includes intangible assets of $335m, or 74¢ a share £1=$1.58