Elementis' earnings for the year to be in line with expectations

Chemicals company Elementis’ sales for speciality products rose in the third quarter but the chromium business remained “challenging”, while overall earnings for the year are anticipated to be in line with market expectations.

For the quarter ended 30 September, the FTSE 250 company reported that the performance of the specialty products business was positive as there was growth in personal care and improvement in Latin America coatings.

Sales from specialty products rose 4% than in the same quarter last year, or 6% on a constant currency basis.

In personal care, where more resources were added, sales climbed 38% due to growing sales of hectorite products in colour cosmetics and antiperspirants, while sales also showed good progress in Italy, China, India and Brazil.

However, for the chromium business the company said the “environment internationally remains challenging” as sales fell 4% om 3% higher volumes, although contribution margins in North America and the rest of the world were stable, while it looks to increase efficiency to offset the effects of a stronger dollar.

The tax rate for the year is expected to be lower than it was for the first half of the year, due to changes in the geographic mix of profits, but overall earnings per share are expected to be in line with market expectations.

The company’s net cash balance at the end of the year is expected to be higher than the $74m reported last year, which will have a positive effect on the special dividend.

In the coatings business, sales were up 5% in Asia Pacific as demand in China reflected underlying growth.

Sales in Latin America grew 38%, as it gained new business accounts in Brazil, Mexico and Chile and despite ongoing economic challenges in Brazil.

Sales in North America stayed relatively flat as demand was affected by the strong dollar on the region’s exporters.

In Europe, following a second quarter 4% sales increase, sales in the third quarter were 5% lower than last year due to reduced consumption across the continent.

In the oilfield drilling business, sales fell 4% as demand patterns remained relatively stable.

Sales declined 14% in the surfactants business as the company aims to reduce activity in it over time, while operating profit was consistent with the reported near break-even run rate in the first half of the year.