By Josh White
Date: Thursday 14 Jan 2021
LONDON (ShareCast) - (Sharecast News) - Specialty chemicals company Elementis said on Thursday that fourth quarter revenue was expected to be ahead of the third quarter, driven by improved volumes and largely stable pricing.
The FTSE 250 company said that overall performance in the quarter was anticipated to be in line with management expectations, helped by tight cost management and supply chain efficiencies.
As a result, adjusted operating profit for 2020 was expected to be between $81m (£59.31m) and $83m.
It said its coatings division had continued to perform well in the fourth quarter, although at lower levels than the prior year period, and remained on track to deliver improved operating margins versus the prior year.
Personal care sales were still "materially lower" than the prior year period in both cosmetics and AP actives, due to the continuation of Covid-19-related social and travel restrictions that had reduced consumption.
Fourth quarter performance there was expected to be in line with third quarter levels.
Talc volumes had continued to recover, driven by improved long-life plastic demand for automotive applications and resilience in coatings.
As a result, fourth quarter revenue was expected to be ahead of the prior year period.
Chromium demand had sequentially improved, driven by increased demand for industrial applications such as leather tanning and metal plating.
As a result, Elementis said fourth quarter revenue there was anticipated to be "broadly in line" with the prior year period.
Its energy sector was continuing to experience "very weak" market conditions, with rig counts and activity levels remaining subdued.
"In the fourth quarter we have continued to deliver against our innovation, growth and efficiency strategy," the board said in its statement,
"For the full-year, we launched 12 new products, captured over $30m of new business and delivered $15m of in year cost savings.
"For 2021, whilst our new business and innovation pipelines are encouraging, we continue to face temporary demand challenges from Covid-19, particularly in personal care where we expect performance will recover when social and travel restrictions are lifted."
As a result of the recently-announced closure of Elementis' plant in Charleston, West Virginia, the company said it had made further progress underpinning $10m of supply chain cost efficiencies, adding that its new AP actives plant in India remained on track for start-up in mid 2021.
It added that, as result of tight working capital management and disciplined capital expenditure, net debt at the end of 2020 was anticipated to be under $415m, representing a "significant reduction" from $454m at the start of the year.
"Elementis has a proven cash generative business model, with average operating cash conversion above 90% over the last three years, and the group continues to operate with ample liquidity, with over $300m immediately available through committed lending facilities."
At 0848 GMT, shares in Elementis were up 0.09% at 115.1p.
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