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Investis Email Alert - Elementis PLC

Interim Management Statement

Interim Management Statement
30 October 2015

Elementis - Interim Management Statement

Elementis plc (ELM.L, "Elementis" or the "Group"), the Global Specialty
Chemicals Company, today issues its Interim Management Statement for the three
months ended 30 September 2015.

Commenting on the Group's performance Group Chief Executive, David Dutro, said:

"I am pleased to report that despite challenging market conditions Group
earnings per share for 2015 are expected to be in line with market
expectations. The trends outlined at the time of our Interim Results
announcement are expected to continue for the remainder of the year, with the
well-publicised downturn in China and North American oilfield activity levels
having the most pronounced impact on current period sales.

The strength and robustness of our business model remains in evidence, as both
market share and contribution margins in Specialty Products have improved while
Chromium margins, as expected, have remained relatively stable. This resilient
margin performance is a clear indication that our customer value proposition
remains in place and that the impact on demand is arising from the current
macro-economic factors. Consequently, we expect positive performance to resume
as end market demand returns.

In the meantime, we are taking measured action to reduce our cost base to a
level that is more consistent with current activity levels and most of the
benefit from this will be seen in 2016. Innovation remains a key factor in our
performance and we will continue to make investments in the future growth of
the business. These will include in decorative coatings, a further expansion of
the New Martinsville facility, and in Asia Pacific, new investments in the
water based dispersants arena, as well as in support of our IP protected, high
value, castor wax based products.

Once again cash flow represents a strong component of our overall performance,
which will continue to enable us to reward our shareholders with attractive
returns via our progressive dividend policy, which includes our special
dividend programme."

Specialty Products' sales were 7 per cent lower compared to the same period
last year on a constant currency basis, or 20 per cent lower on a reported
basis. The remainder of this business commentary refers to constant currency

  * In coatings, North America sales for decorative applications continued to
    show good progress as we benefited from the capacity expansion and product
    innovation from our new additives plant in New Martinsville. However sales
    to industrial applications continued to experience a slowdown in end-user
    exports on the back of the stronger US dollar. As a result, combined
    coatings sales in North America were 7 per cent lower than the same period
    last year. In Europe, sales of coatings additives were lower by 4 per cent
    for the quarter, but still ahead of the previous year by 1 per cent for the
    first nine months of the year. In Asia Pacific, sales for the quarter were
    15 per cent lower as the recent slowdown in China continued to be a major
    influence, causing our customers to be cautious in their buying patterns.
    Additives sales to Latin America were 6 per cent lower due to the
    continuing economic weakness in Brazil.

  * In personal care, sales for the quarter were 4 per cent lower than the
    previous year, as the business continued to be impacted by a reduction in
    sales in Latin America due to currency movements, as reported at the time
    of the Group's Interim Results.

  * The level of activity in the North American oil and gas drilling sector
    remained consistent with that experienced in the second quarter and hence
    sales for the third quarter were 47 per cent lower than the previous year.

Chromium continued to perform in line with its strategy of delivering stable
earnings and cash flow. In the current quarter, sales were 21 per cent below
the same period last year as markets outside North America continued to be
influenced by currency related pricing trends. In addition and as previously
noted, sales of refractory grade oxide in North America have returned to more
normal levels in 2015, having been particularly strong during 2014. In response
to this the business has been able to leverage its flexible manufacturing
platform and efficient operational base in order to offset the lower sales with
lower operating costs and site optimisation projects, as well as a one-time
benefit from the resolution of a legacy legal issue which we reported at the
time of our Interim Results in July.

As a consequence of changes in the geographic mix of profits, the Group's 2015
tax rate is expected to fall to approximately 19 per cent.

A revised funding agreement was concluded during the quarter for the Group's UK
pension plan, based on the latest actuarial valuation as at 30 September 2014.
As a result of this new agreement, the Group's combined contributions across
all of its retirement plans are expected to be less than $15 million per annum
in each of the next three years. In 2015 total contributions will be
approximately $23 million, so this represents a significant reduction in
contributions going forward.

The Group balance sheet remains in a robust position and strong operating cash
flow continues to be a positive aspect of the Group's performance. In addition,
the net cash balance at the end of the year will benefit from the recent sale
of a parcel of land at Corpus Christi, which generated after tax proceeds of
approximately $15 million. Consequently the Group's year end net cash balance
is expected to be higher than the $64.2 million reported at the end of 2014.


Elementis plc                           Tel: +44 (0) 20 7067 2999 
Brian Taylorson, Finance Director                                 
FTI Consulting                          Tel: +44 (0) 20 3727 1000 
Deborah Scott                                                     
Matthew Cole
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