Elementis hit by oil market downturn, dollar impact on chromium

The market downturn in oilfield drilling and the impact of the dollar on chromium sales outside of North America hit first half profits at specialty chemicals firm Elementis which fell in line with expectations to $44.7m from $65.3m.

Sales fell to $334m from $360.4m. The dividend is unchanged at 2.7p a share.

In specialty products, sales into the oilfield sector have recently been more stable and coatings sales in China appear to have returned to growth following the destocking that took place in the first half of 2015,” Elementis said.

“This has allowed our core strengths to become more apparent, with good growth evident in personal care, decorative coatings and new products. Our chromium sales outside of North America have been impacted by a stronger dollar, but our business in North America continues to demonstrate a good degree of stability.”

In oilfield drilling, where there was a significant downturn in sales during the first quarter of 2015 due to the reduction in North American drilling activity, Elementis said.

“Sales were more stable during the first six months of 2016. With the first quarter of 2015 being a difficult comparator period, sales volumes for the first six months of 2016 were 20% lower than the previous year,” the company said.

“However, volumes in the second quarter were only 6% lower and recent improvements in the North America rig count data provide further evidence that the market is at least stabilising."

The company said many of its core strengths, in terms of market position, growth opportunities and margin stability, remain firmly in evidence.