- The chemicals business makes ingredients for deodorants and skin creams.
- Turnover was boosted by growing demand for cosmetic and coating products
Elementis remains optimistic that its annual results are in line with forecasts after a strong start to the year.
The chemicals business, which makes ingredients for deodorants and skin creams, said its adjusted operating profit rose by double digits in the first three months of 2024, while its operating margin saw a “material improvement.”
Its revenue also rose 3 percent at constant currency levels thanks to growing demand for cosmetics and coatings products, the latter driven by better restocking.
Chemicals company Elementis makes ingredients for deodorants and skin creams
Revenue growth was tempered by lower orders for talc, a common material in ceramics, due to the strike by the Finnish transport workers’ union.
The strike by the AKT union led to port closures and a four-week standstill of rail freight traffic in Finland, as well as lower sales and higher logistics costs for Elementis.
However, the company said it posted a “good” result in the first quarter and expects to post full-year performance in line with expectations, including an operating margin of 15.8 percent and adjusted operating profit of $117 million. of dollars.
Paul Waterman, its chief executive, said: “I am confident that our clear strategy focused on innovation, growth and efficiency will enable us to achieve a significant improvement in our performance throughout the year and continued margin expansion.”
Elementis’ latest trading update comes a day after a prominent shareholder called on Waterman to resign, claiming he had overseen a long period of poor results caused by “self-inflicted management failures.”
Gatemore Capital Management criticized Elementis in a public letter for ‘persistent and significant underperformance’ compared to its peers and spending too much on acquisitions.
Particular criticism was reserved for the acquisition of talc producer Mondo Minerals, which Elementis bought in 2018 for $500 million from private equity giant Advent International.
Gatemore said the “promised synergies” of the Mondo deal failed to materialize and contributed to worsening debt and cash flow problems, prompting Elementis to cut dividends and issue a reset on the pact.
The activist investor suggested the company replace Waterman because he is “no longer trusted to be the individual” to right the “mistakes of the past.”
It also wants Elementis to accelerate its cost savings program and conduct a strategic review to make it “more attractive to a strategic buyer.”
elementis stock They fell 0.3 per cent to 141.8 pence late on Tuesday afternoon, but have still risen around 16 per cent over the past year.