Q3 Trading Update
Financial recovery continues
Outlook unchanged, in line with expectations
Elementis plc ("Elementis" or the "Group"), a global specialty chemicals company, today issues a trading update for the three months ended 30 September 2021.
Third quarter business performance
The Group has delivered a strong third quarter performance as trading continues to improve with revenue up 16% on an underlying basis, driven by higher volumes and pricing actions. While there are material global supply chain challenges, such as raw material availability, logistical bottlenecks and rising inflation, we are successfully managing these impacts via supply resiliency, self-help actions and the implementation of price increases. As a result, our 2021 outlook is unchanged.
· Coatings continued to perform well with strong revenue growth versus the prior year period, as robust industrial coatings activity more than offset a moderation in European decorative demand. Despite cost inflation headwinds, the combination of pricing actions and continued growth will keep the business on track for improved operating margins versus the prior year.
· Personal Care performance improved on the prior year period as demand continued to show signs of recovery from COVID-19 lows, particularly in cosmetics, as social and travel restrictions began to ease, albeit still at levels below 2019. As expected, the new AP Actives plant in India started up in Q3 and a 12 month ramp up is now in progress.
· Talc revenue rose modestly on the prior year period as semi-conductor related supply challenges significantly reduced global automotive production. Pricing actions and cost savings, in response to increased logistics and energy costs, are expected to support a sequentially improved second half performance.
· Chromium performance improved on the prior year, as demand strengthened in areas such as aerospace and refractory. Global industry utilisation levels continued to improve and, if sustained, should result in improved pricing in 2022.
We have continued to successfully deliver against our Innovation, Growth and Efficiency strategy. In 2021 we expect to launch over 20 new products, win more than $35m of new business, and deliver $10m of in year cost savings.
The full year outlook remains unchanged; the Group expects to deliver an improved financial performance and a reduction in leverage, in line with expectations.
The second half of the year is expected to follow a normal level of seasonality, with continued demand recovery and self-help actions mitigating the impact of near-term margin headwinds from accelerating cost inflation and supply chain constraints.
Commenting on the performance, CEO, Paul Waterman said,
"We have delivered a strong third quarter performance, have good trading momentum and are taking proactive steps to mitigate both rising inflation and global supply chain challenges. The delivery of our strategy, alongside a continued post COVID-19 demand recovery, is expected to drive a material, multi-year performance improvement, underpin the delivery of our medium-term Group financial objectives and generate significant shareholder value."
James Curran, Investor Relations Tel: 020 7067 2994
Martin Robinson Tel: 020 7353 4200