Covid-19 impairments knocked Elementis (ELM) into the red in the first half, although its sales were not far off yher 2019 half-year. The chemicals group made $60m (£46.3m) in goodwill impairments on its talc and oil & gas businesses, which were hit by Covid-19 after a poor 2019.
Elementis’s personal care division held up thanks to higher antiperspirant sales in India. The strategy was to gain market share (at the cost of margin) before a new plant opens. This was meant to happen this year but has now been pushed back six months to mid-2021 because of Covid-19 restrictions.
The India sales, combined with lower cosmetics sales, meant revenue was flat on an organic basis at $90m for the period.
The coatings division, which sells to carmakers and other big industry, saw a 7 per cent sales drop to $148m. Chromium continued its poor run and sales shrank 12 per cent, to $78m while energy revenue plunged, leading to an operating loss.
Aside from the writedowns, the other impact of Covid-19 was a $24m drop in working capital compared to the middle of 2019. The company said a 14 per cent fall in sales overall and a linked decline in receivables.
Broker Numis forecasts full year reported revenue at $750m, a 14 per cent drop on 2019.