Volume growth, self-help drive revenue improvement for Elementis

(Sharecast News) - Elementis reported a 3% rise in revenue in its preliminary results on Thursday, to $738m, supported by volume growth and self-help initiatives. The FTSE 250 company said adjusted operating profit increased 24% to $129m, reflecting cost reductions and efficiency improvements.

Adjusted operating margin improved to 17.4% from 14.6% in the prior year.

The company's net debt declined 22% to $157m, reducing its net debt-to-EBITDA ratio to 1.0x from 1.4x.

Adjusted diluted earnings per share increased 23% to 13.3 cents, supporting a 90% increase in the full-year dividend to four cents per share.

However, Elementis recorded a statutory operating loss of $27m due to a $126m impairment charge related to its Talc business, for which a strategic review is ongoing.

The firm said it continued to execute its strategic growth initiatives, delivering $26m of above-market revenue expansion across six key platforms and securing $60m in new business.

It also completed the closure of its AP actives plant in Middletown as part of its ongoing portfolio optimisation efforts.

Looking ahead, Elementis said it expected a solid start to 2025 despite a challenging demand environment.

The company said it was targeting additional efficiency savings of $12m and planned to introduce 15 new products across its growth platforms.

It said it remained confident in achieving its 2026 capital markets day targets, underpinned by a strong new business pipeline and further operational improvements.

"Elementis delivered a strong performance in 2024, outperforming the market in a flat demand environment," said chief executive officer Paul Waterman.

"Our strategy is working. Innovation and new business continue to drive growth, with $60m of new business of which 75% was from our core growth platforms.

"At the same time, our efficiency programmes are accelerating, with $18m of annual cost savings delivered in 2024 and the remaining $12m expected in 2025."

Waterman said the actions supported the form's progress towards 19%+ operating margins and over 90% cash conversion, while its return on capital employed was now 19%, excluding the impact of Talc impairment.

"We've also strengthened our balance sheet by reducing net debt to EBITDA from 1.4x to 1.0x and have recommended a final dividend of 2.9 cents per share.

"In recognition of our strong balance sheet and the positive outlook for the business, the board will evaluate a range of options for additional shareholder returns."

Reporting by Josh White for Sharecast.com.