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(Sharecast News) - Specialty chemicals firm Elementis backed its full-year guidance on Wednesday after a "resilient" third quarter.
In an update for the three months to 30 September, Elementis said it was on track to deliver a full-year performance in line with market expectations for adjusted operating profit of $125m despite "ongoing weak market conditions".
The company said it was supported by its 'Elevate Elementis' strategy and positive changes being implemented across the group.
During the quarter, revenue rose about 2% from the prior period to approximately $152m. On a constant currency basis, revenue was flat due to a weaker dollar.
Adjusted operating profit improved against the prior year, it said, driven by self-help and cost-control actions.
In the personal care segment, sales were flat on constant currency basis, with positive price and volume impacts helping to offset the negative impact of mix in the period.
Coatings sales were also flat on a constant currency basis due to volume and mix weakness in the Americas. This was partially offset by price improvements, Elementis said.
Meanwhile, the energy business continues to perform "strongly" with volumes, pricing and mix higher than the prior year period.
Elementis said it was on track to deliver $12m in cost savings by the end of this year, completing the $30m of cost savings announced in November 2023 for delivery by the end of 2025.
The company also said that following the successful completion of several significant milestones in his time as chair - including the sale of the Chromium and Talc businesses, the appointment of Luc van Ravenstein as CEO and the launch of the new Elevate Elementis strategy in July - chair John O'Higgins will not seek re-election at the AGM next April.
He will step down as chair and non-executive director immediately after the AGM and further details on the succession plan will be provided in due course, Elementis said.
Chief executive Luc van Ravenstein said: "I am pleased to report that we have delivered a resilient third quarter performance, despite the continued softness in the coatings markets, demonstrating the strength and quality of our business and our commitment to delivering outstanding value for our customers.
"While revenue was broadly stable on the prior year period, our margins remain healthy due to the benefits of our proactive operational efficiency initiatives as we create a simpler, leaner Elementis. With market demand in coatings likely to remain soft, we remain focused on executing our Elevate Elementis strategy - designed to accelerate sustainable growth and deliver attractive returns."
Jefferies said: "Elementis' 3Q sales performance should come as a relief given the tough volume/mix backdrop for both divisions (particularly in Coatings, where a flat yoy CC performance is a particularly good outcome, in our view, and follows a positive update from SHW yesterday), and we would highlight that Elementis is one of the few chemicals companies raising prices right now, which reflects its market positioning.
"There are some moving parts around cash, but we are comfortable with our net debt forecast. FY25F guidance has been maintained, which is helpful (comments around margin imply outperformance of our FY margin forecast), and reflects strong cost control, and overall we expect no change to consensus. The likely focus of the update is that John O'Higgins is stepping down."
The bank reiterated its 'buy' rating on Elementis shares.
