Elementis profits growth disappoints but extra cash funds special dividend

24th Feb 2015 10:05

Speciality chemicals group Elementis overcame a tough final quarter to deliver solid progress in pre-tax profit and sales for 2014 on the back of a strong performance in its North American business.Pre-tax profit rose 4% to $141.9m (£91.9m) on the back of sales up 2% to $790.4m, as strong growth in its speciality products arm was partly offset by the performances in its chromium and surfactants businesses.Earnings per share showed a fifth consecutive year of growth, though diluted EPS up 8% to 24.8 cents thanks to a lower tax charge was a shade lower than house forecasts of 25.1c as a result of lower demand in the specialties division in the final three months of the year.However, the FTSE 250 group said both divisions performed in line with expectations and with the new year starting on a "solid footing" the board was happy to lift the final dividend 5% to 5.75 cents, with the total dividend boosted by a large cash flow outperformance, with net cash of $64m versus previous guidance of "at least $40m" that triggered a further special dividend of 6.95 cents."Elementis delivered another year of solid financial performance," said chief executive David Dutro."This continuous improvement has been achieved despite uneven regional and market growth, which further validates our strategy and underlines the resilience of Elementis.""Although economic uncertainties in Europe and evolving dynamics in the oilfield sector remain evident, the current year has started on a solid footing and we are confident that the group will make further progress in the coming year."In a note to investors on Tuesday, house broker N+1 Singer reduced its 2015 forecast, saying it was "cautious on oilfield sales and now assume a 12% decline in sales", leading to 2.7% cuts in group revenues for the next two full years, filtering down to a 1.7% decline in earnings per share for 2015 to 25 cents.Elementis shares were down 2.15% to 278.20p at 10:30 on Tuesday.