Shares in FTSE 250 chemicals firm Elementis (ELM) fell 2.5% to 120.8p after it swung to an annual loss, pinned on the impact from Covid-19 across its industrial and consumer end markets.
In its full year results for 2020, the firm’s pre-tax loss stood at $68.8 million compared with a profit of $61 million year-on-year as revenue fell 14% to $751 million. Adjusted operating profit meanwhile was $81.6 million.
Performance across all its divisions was impacted in 2020, with energy seeing the biggest hit with a 49% fall in revenue, while coatings and personal care were less affected with 7% and 9% falls in sales respectively.
Looking ahead, the company said it continued to see demand improve and had made an encouraging start to 2021 but remained cautious on its outlook due to the Covid-19 dynamic.
‘We have made an encouraging start to 2021, and for the full year expect improved financial performance and deleveraging, linked to Covid-19 developments,’ the company said.
‘We will continue to maintain our focus on self-help actions to optimise performance, and in 2021 expect to deliver more than $30 million of new business opportunities, over 20 new products and $10 million of cost savings,’ the firm added.
‘FROM DELEVERAGING TO RECOVERY’
Elementis’ results were in line with market expectations, while Numis analyst Kevin Fogarty pointed to the firm’s deleveraging, with net debt for the year reducing to $408 million, below consensus estimates of $417 million, as a result of the suspension of its dividend and strong operating cash conversion of 137%.
Fogarty said, ‘The encouraging start the Group has made to the current financial year points to an improving outlook, though there remains caution around the pace of the lifting of C-19 restrictions on the demand recovery in some segments.
‘In our view, greater confidence in the pace of any near-term demand improvement would help to shift the focus of the investment case from deleveraging to recovery.’
