Elementis PLC AGM Trading Statement (2351L)
April 29 2020 - 1:00AM
UK Regulatory
TIDMELM
RNS Number : 2351L
Elementis PLC
29 April 2020
Elementis plc
AGM Trading Statement
Solid first quarter performance
Proactive measures taken to mitigate Covid-19 impact
Elementis plc ("Elementis" or the "Group"), a global specialty
chemicals company, today issues a trading update for the three
months ended 31 March 2020.
First quarter business performance
In the first quarter of 2020, trading has been in line with
expectations, with year on year operating profit growth. Our global
supply chain operated well with no raw material shortages or plant
shutdowns except for, as previously announced, a temporary closure
of two sites in China during February.
-- Personal Care performance was modestly ahead of the prior
year period, with resilient Cosmetics performance. AP Actives was
stable with good volume growth offset by year on year pricing
impacts.
-- Coatings revenue grew with strong volumes in Asia and the
Americas driven by new business wins and good momentum at global
key accounts. Margins improved materially driven by cost savings,
an improved product portfolio and lower raw material costs.
-- Talc performance was broadly in line with the prior year
period as robust sales in plastics and coatings were offset by
lower ceramics and paper sales.
-- Energy had a challenging start to the year with deteriorating
market conditions only partially offset by strong global key
account sales.
-- Chromium sales were in line with the prior year period but
margins declined due to lower pricing, notably outside of North
America.
Liquidity and balance sheet
Elementis has a proven cash generative business model, with
average operating cash conversion of 90% over the last 3 years. In
addition, the Group continues to have significant liquidity, with
in total over $300m immediately available through committed lending
facilities. Total net debt for the Group (excluding lease
liabilities under IFRS 16) was $454m at 31 December 2019,
representing a ratio of 2.7x EBITDA* compared to a recently relaxed
banking covenant of 3.75x*, which will apply for the next two
testing periods (i.e. 30 June 2020 and 31 December 2020).
Proactive Covid-19 measures
To safely service customer demand the company has taken
proactive steps to protect its people and maintain operations
during the Covid-19 situation. The company's 22 operating sites
continue to operate well, with the exception of a two week shutdown
of our Palmital (Brazil) site in April. Construction of our new
site in Mumbai, India, has been temporarily stopped due to
government restrictions on operations.
In addition to the previously announced suspension of the 2019
final dividend, saving approximately $33m, and the temporary
relaxation of banking covenants, the Group has taken the following
further actions:
-- Stopping all discretionary spend
-- Reducing manufacturing costs based on lower demand
-- Identifying additional working capital reductions
Outlook
Although first quarter trading was in line with expectations
with improved profitability, the macro-economic and end-market
outlook is highly uncertain and we have seen an approximate 15%
year on year decline in April revenue. Given the uncertain
environment no specific guidance is provided for the remainder of
the year, although we will update as and when visibility improves.
We continue to tightly and actively manage the business in terms of
costs and cash flow to address changes in demand.
Commenting on the performance, CEO, Paul Waterman said,
"Elementis has a high quality, advantaged portfolio in premium
performance additives with good long term growth opportunities.
While our Q1 business performance was in line with expectations,
the macro-economic and end-market outlook over the coming months is
very uncertain. Having agreed a relaxation of our banking covenants
and suspended our dividend to strengthen our financial position,
our focus remains on what we can control, namely managing our
operations well and optimising both cost and cash management."
Directorate change
Sandra Boss, Non-Executive Director has notified the Board that
she wishes to retire from the Board to take up a full-time
executive role. Sandra has served as a non-executive director and
member of the audit, nomination and remuneration committees since
February 2017 and in 2019, Sandra was appointed as designated
non-executive director for engagement with the Company's workforce.
A selection process for an additional Non-Executive Director has
commenced.
Accordingly, Resolution 6 as set out in the Company's Notice of
Annual General Meeting dated 19 March 2020 relating to Sandra's
re-election as a director will be withdrawn. The withdrawal of this
resolution does not affect the validity of the proxy form
circulated to shareholders in respect of the 2020 Annual General
Meeting or any proxy votes already submitted.
Enquiries
Elementis plc
James Curran, Investor Relations Tel: 020 7067 2994
Tulchan
Martin Robinson/David Allchurch Tel: 020 7353 4200
Notes
* Pre IFRS-16
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTKVLFLBZLFBBX
(END) Dow Jones Newswires
April 29, 2020 02:00 ET (06:00 GMT)
Elementis (LSE:ELM)
Historical Stock Chart
From Apr 2024 to May 2024
Elementis (LSE:ELM)
Historical Stock Chart
From May 2023 to May 2024