- Chromium sale has helped to reposition the company
- Plans to reinstate the dividend
- Personal Care division profits beat analyst expectations
The market was unmoved despite newly-streamlined Elementis (ELM) announcing plans to reintroduce dividends later this year.
The dividend news came as the FTSE 250 specialty chemicals company reported its first set of full-year results after the sale of its Chromium business. In early afternoon trading the shares were down a smidge at 126p.
The sale to Dutch-Turkish conglomerate Yildirim for $170 million was completed on 31 January and the proceeds, $119 million, will go towards a net debt which stood at $367 million at the start of this year.
WHAT DOES THE DISPOSAL OF CHROMIUM MEAN?
Paul Waterman, CEO of Elementis told Shares: ‘The disposal of the Chromium business has helped to re-position us as a focused specialty chemicals company. This focus on advantaged, high value products will enable us to deliver higher quality earnings and margins, with lower volatility, and generate significant shareholder value.’
Elementis reported a statutory loss for the year of $51 million, including a $103 million non-cash goodwill impairment charge in the Talc business.
Revenue, however, rose 4% to £736 million compared to £709 million in 2021. Adjusted operating profit from continuing operations was up 14% to $101 million.
The three remaining divisions: are Personal Care (chemicals for deodorants, soap, skin care products); Coatings (used for the industrial and construction sectors); and Talc (used in paper, paint, plastics, polyester, ceramics and even food).
From January the Talc business has been combined with the Coatings business, to create a new Performance Specialties business. The company hopes by doing so it will create a greater market focus, enhanced growth opportunities and reduced costs.
‘We have two divisions, Personal Care and Performance Specialties, both with attractive growth opportunities and margin profiles,’ said Waterman.
‘Trading conditions remain subdued in many of our markets, and we therefore anticipate that demand phasing will be stronger in the second half of the year. Energy prices are also moderating from the peaks of last year.’
WHEN WILL THE DIVIDEND BE REINSTATED?
Elementis suspended its dividend at the start of the pandemic in 2020, as a matter of caution and has yet to reinstate it, much to the disappointment of shareholders.
The company hopes to resume payouts in the second half of 2023, it continues to strengthen its balance sheet and carry out further deleveraging.
Waterman said: ‘We remain confident of the delivery of our medium-term target of 17% operating margin.’
The speciality chemicals group delivered a record $59 million revenues from new business opportunities with 18 new product launches in 2022; new products also accounted for 13% of sales, Elementis is now on track for a target of 17% of sales by 2025.
