Elementis Reports Mixed H1 Results Amid Challenging Market Conditions
Why we think this is neutral
While Elementis has shown some resilience in a tough market, there are clear headwinds that can't be ignored. The 7% increase in adjusted operating profit and improved margins are positive signs, but they're offset by a 1% revenue decline and softer demand in key segments. The significant reduction in net debt is commendable, but the £100m loss from discontinued operations is a bitter pill to swallow. The outlook remains cautious, with the company only expecting to meet market expectations. It's a mixed bag, really - some green shoots, but plenty of challenges ahead.
Key Points
- Revenue down 1% to $308m on a constant currency basis
- Adjusted operating profit up 7% to $65m
- Adjusted operating margin improved to 21% from 20%
- Net debt reduced to $125m from $196m at end of 2024
- Personal Care sales up 2%, Coatings sales down 4%
- Loss of $100.2m from discontinued operations due to Talc business sale
- New 'Elevate Elementis' strategy launched to drive growth and returns
- Full-year profit performance expected to be in line with market expectations
Summary
Elementis reported mixed results for H1 2025, reflecting both resilience and challenges in the current market environment. Revenue decreased by 1% to $308m on a constant currency basis, impacted by soft market conditions. However, adjusted operating profit increased by 7% to $65m, with adjusted operating margin improving to 21%. The company's financial position strengthened with net debt reducing to $125m and a net debt to EBITDA ratio of 0.9x. The sale of the Talc business resulted in a significant loss from discontinued operations of $100.2m. Looking ahead, Elementis launched its new 'Elevate Elementis' strategy to drive growth and returns, but expects full-year profit performance to be in line with market expectations, reflecting ongoing market challenges.