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Elementis (ELM) – Finals PTP: £36.2m (£26.8m) Divi: 1.4p (1.2p)

Solid growth in all three of the global specialty chemicals company’s businesses attributed to a 21% hike in operating profit to £38.1 million and sent shares in the firm up 9% to 77p. Revenue came in at £299.8 million, against £302 million the year before, but on a constant currency basis, this was an increase of 4%.

The company’s Specialty Products arm enjoyed robust demand in all major sectors, aside from North American coatings which was hampered by a slower US housing market and saw volumes fall by 7%. However, volume gains in coatings in Europe (3%) and Asia (7%) helped to counteract this. In its Surfactants business, Elementis has continued to optimise the product portfolio by reducing sales of lower margin commodity products and focusing on more differentiated applications, where it is easier to improve pricing in response to rises in raw material costs.

Meanwhile, its Chromium division, which has previously suffered from earnings volatility, reaped the benefits from a one off energy rebate of £1.4 million as well as changes in Chinese tax regulations which helped to boost demand for chrome oxide and chromic acid. The year also saw Elementis reduce net debt by £84.4 million to £16.2 million. Going forward, the company says it has a strong balance sheet and is in a good position to drive profitable growth. The group is also looking to expand its presence in Asia, and progress for 2008 is expected to be in line with expectations.

Shares says: Another year of solid progress and share price weakness at the end of 2007 provides a good buying opportunity.

by: Rachel Robson