Elementis Q1 sales hit by currencies, lower oilfield sales

Speciality chemicals outfit Elementis said it was “proactively” managing its margins and cost base to make sure full year results stay in line with management expectations as oilfield revenues and currencies hit first quarter sales.

Chief executive Paul Waterman said some markets continued to be challenging and Elementis was “cycling against a stronger first quarter in 2015”.

“The group’s balance sheet remains strong and is again expected to be in a net cash position at the end of the year which, under our dividend policy, will continue to provide shareholders with attractive returns,” he said in a trading update.

Lower oilfield sales and currencies led to a 7% fall in total 2016 first quarter revenues. In coatings additives, sales in North America were similar to the previous year as sales of decorative products from the New Martinsville plant continued to make good progress, while industrial sales remained subdued due to the impact of the stronger dollar on consumer exports.

First quarter sales in oilfield drilling fell 37% year-on-year following the sharp downturn in North American demand that took place in the early part of 2015.

Sales in Europe were up 1%, while sales in Asia Pacific were 1% lower, following the destocking and adjustment that took place in the Chinese economy in the second quarter of 2015. Sales to Latin America, which represent 5% of total coatings sales and were 9% lower than the previous year due to economic weakness in that region, particularly in Brazil.

In personal care, sales were 4% higher than the previous period, as the business continued to benefit from geographic expansion and new product sales.

Chromium sales fell sharply, down 11%, as market conditions outside of North America continued to be challenging.

“Although sales in North America were lower by 5%, this is largely due to order timing and sales for the first six months of the year are expected to be in line with the same period last year. Sales outside of North America were 19% lower than the previous year, with volumes lower by 6% and pricing lower by 13%,” Elementis said.