Weak drilling activity, strong dollar hurts Elementis

A reduction in oilfield drilling and a strong dollar had a big impact on Elementis in 2015, with the company reporting its preliminary results for the calendar year on Tuesday.

The FTSE 250 firm saw total sales decrease 14.12% to $678.8m (£485.2m) during the year, from $790.4m in 2014.

Operating profit was $122.5m, down 18.39% from $150.1m, and profit before tax was $116.2m, down from $141.9m. The company's profit for the year was $95.3m, from $175.4m a year earlier.

Diluted earnings per share, before non-recurring items, were 20.8c, down from 24.8c. Basic earnings per share were 20.6c, down from 38.1c.

Elementis proposed a final dividend of 5.75c, unchanged from 2014. Combined with the 2.7c interim dividend and the 8c special dividend, the total distribution for the year totalled 16.45c per share, up from 15.4c.

"Following five successive years of earnings growth, our performance in 2015 was impacted by the significant downturn in oil and gas drilling activity and the effects of a stronger US dollar, both in terms of translation and its influence on market dynamics," said incoming group chief executive Paul Waterman.

"Exporters from North America have seen the competitiveness of their products eroded by the appreciation of the US dollar and this in turn had a constraining influence on export sales in our Chromium business, as well as our Specialty Products North American industrial coatings sales. However, the core components of our business model showed impressive resilience during this demanding period," he added.

The company's board also highlighted its Specialty Products division as delivering improved contribution margins and market share gains, with North American decorative coatings growing 15%, European coatings up 3%, and Personal Care up 3% for the year and 6% in the second half.

Elementis's cash generation was described by the board as 'excellent', with its net cash position growing to $74m.