Elementis Share Discussion Threads

[broadwood] 26/10/2012 08:24

- Speciality chemicals group Elementis said it remains on track to hit earnings per share (EPS) forecasts this year due to a lower tax rate, but headline operating profits will be hit by a temporary slowdown in oilfield drilling.

The company, which provides functional additives to many markets including architectural and industrial coatings, personal care and oilfield drilling, said it saw a reduction in demand in oilfield drilling during the third quarter on the back of a slowdown in shale drilling activity in North America and a late start to the Canadian drilling season. Oilfield drilling - part of the Speciality Products division - accounts for 15% of group sales.

Elementis said: "This combined with some short term inventory adjustments by the major oil service companies, led to sales in the quarter being 23% lower than the previous year. However, the underlying fundamentals for this sector remain positive and the group expects to continue to benefit from attractive growth rates going forward."

As such, the company said that group operating profit for the full year, "although comfortably ahead of the previous year", will be adversely affected by this slowdown. However, due to a lower-than-initially-expected group tax charge of 26-27%, full-year EPS will be in line with market expectations.

Despite the disappointment, the company reassured that investors will continue to see benefits of its strong cash generation. The firm currently expects to have a net cash position at the year-end of $50m and, as previously announced, intends to distribute up to 50% of this as a special dividend

[steeplejack] 26/10/2012 08:22

Well i hate to be old fashioned and mull over the valuation but this stock is with the special dividend payout, probably yielding over 4%.In effect it's doing a Melrose,with healthy dividend payouts restricting downside.As for traders,there's a loser for every winner isn't there?I wish 'em all luck.

[broadwood] 26/10/2012 08:19

Covered all angles there then.

[yewtrees] 26/10/2012 08:18

I have used the drop for topping up my ISA to the full. Content with a long term investment in a well-run expanding company.

[broadwood] 26/10/2012 08:14

Could be viewed that way but an oil drilling slowdown was probably envisaged and recent weakness in the share price may have already reflected that.

Lets hope that this is just an initial defensive markdown.

[steeplejack] 26/10/2012 08:12

No,it's saying that operating profits will be slightly below expectations but eps will be in line due to a lower tax charge.
If you invest in equities nowadays you must expect ridiculous volatilty and here today we have one such example as a good solid long term investment gets marked down by adolescents who would struggle to spell the company name,let alone understand what the company does.Is it any wonder that euity brokers find it hard to get investors to part with their cash.

[gardenarc] 26/10/2012 08:09

Expected but we are doing ok in these markets,but spot on itchy.

[itchycrack] 26/10/2012 08:06

In effect this is lowering outlook guidance - profit warning!!!

[steeplejack] 26/10/2012 08:01

If they distribute $25m by way of a special dividend,i think you're looking at 5.5 cents,around 3.5p at current xrates,a yield on the special payment alone of around 1.7%.Melrose did a similar special distribution a year or so back.

[broadwood] 26/10/2012 07:44

I guess we can be grateful that oilfield drilling represents only 15% of sales.

Seems they are going to hit expectations but only because of a lower tax charge.

[broadwood] 26/10/2012 07:08

The only negative is the slowdown in the oilfield drilling,otherwise all other dectors doing pretty well.

Remains to be seen how market will view it.

[broadwood] 25/10/2012 16:57

This is what was said in July and, to be honest, you couldn't get more positive than that.They showed they can perform even in the face of a general slowdown and were confident enough to declare a special dividend. It seems to be a niche market operator.

So fingers crossed for tomorrow.


"Elementis has delivered another record financial performance in the first half of 2012. Achievement of these results during a period of significant global uncertainty provides further evidence of the resilience and inherent quality of our business. The disciplined implementation of our growth strategy, the strength of our market position and the added value nature of our product portfolio are all evidenced by these results.
We have continued to transform the Group, particularly through our strategic actions in Specialty Products. We were pleased to announce in May plans to build a specially designed US facility that will manufacture our highly innovative and patent protected products which will drive growth in the decorative coatings market. In June we announced the acquisition of Watercryl, a Brazilian coatings additives company. This acquisition provides us with the opportunity to extend our innovative product portfolio to the Latin America market.
Given the Group's robust balance sheet position and the strongly cash generative nature of our businesses, the Board has announced that, in addition to the current progressive dividend policy, a special dividend programme will be instituted that will provide a return to shareholders of up to 50 per cent of year end net cash on the balance sheet.
We are well positioned to further enhance shareholder value through our key growth strategies of geographic expansion, market share gain, new product development and bolt-on acquisitions, and expect to make further progress in the second half of 2012'.

[yewtrees] 25/10/2012 08:45

The difference with this chemical company, it is creating chemicals for use in the oil and gas industry.

[toffeeman] 24/10/2012 17:17

Key Fib retracement at 200ish

Support at about 205 so trade the possible bounce with a tight stop at 198?

[gardenarc] 24/10/2012 15:08

Spot on itchy.

[itchycrack] 24/10/2012 14:51

The chemicals sector is a leading indicator in the economic cycle. Du Pont had a big earnings miss in the US and lowered guidance, BASF also weak, expect further weakness here going forward. Unless the TS offers a stella upside to the 2013 outlook the only way is south, 180p first target.

All IMHO of course, DYOR etc.

[stopaloss] 24/10/2012 10:19

It's not a good sign that these are drifting down in the week leading up to the trading statement. If its not a particularly good one these could go further south.......

[gardenarc] 23/10/2012 15:58

Expected..

[painter] 18/10/2012 15:51

Thanks Stopaloss

[stopaloss] 18/10/2012 15:33

Trading Statement Friday 26th Oct.

[painter] 18/10/2012 12:32

Consolidation yes but now 6% off the recent high with IMS due soon.

I am watching for a reason to top up here as I like ELM's growth prospects. I would like to see a few broker updates and increased volume. Last brokers note I think was on 17-Aug-12 Berenberg Bank Buy 214.00p - target 260.00p New Coverage

IMS was on the 28th October last year 2011 anyone know the exact date for this year?

[cockneyrebel] 09/10/2012 08:28

Nice little consolidation on the chart - setting up for a big rally here?

CR

[bones] 21/9/2012 18:14

Thanks for the info Enami :)

I know ELM was added to Stoxx600 recently as well.

[enami] 21/9/2012 17:15

bones "Very intrigued why so many were traded today at close of week and near the end of day" - FTSE quarterly review effective at today's close so many tracker funds rebalancing portfolios to reflect the changes.



FTSE250 Inclusions
Ashmore Group
ICAP
Playtech
Pace
SuperGroup
Unite Group
Workspace Group

FTE250 Exclusions
Melrose PLC
Wood Group (John)
Cape
JPMorgan Asian Investment Trust
Gem Diamonds
Avocet Mining
Aquarius Platinum