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Elementis Recaps Year

Published on 2003-01-02. Author : SpecialChem

Elementis today issues a trading update ahead of the preliminary results for the year ending 31 December 2002.

Overall market demand continues to be flat and, as expected, sales for the year will be below the equivalent period last year. In particular, strong pricing pressure in Elementis Chromium has increased during the second half of the year. Cost control discipline has been effectively applied throughout Elementis and as expected, underlying operating profit for 2002 will be well above the 2001 level, albeit slightly below current market expectations.

During the second half of the year, a number of actions have been taken to improve financial performance and drive the growth strategy outlined earlier this year.

The acquisition of OxyChem's chromium chemicals business was completed on 6 December, and integration is progressing. Rationalisation of the manufacturing operations at Corpus Christi is underway, which will provide identified cost saving benefits in 2003, significantly improving Elementis Chromium's competitive position in the Americas.

An investment of £10 million has been approved for a basic pigments manufacturing facility at a new site in Taicang, near Shanghai, China. The new wholly-owned plant will produce technically advanced products for the Asia-Pacific market and is expected to be commissioned in 2004.

The strategic review of the Elementis Pigments operation at Birtley in the northeast of England concluded that the site will remain operational but will be significantly restructured to improve profitability. The commodity zinc business will be closed resulting in the loss of around 65 jobs. An exceptional charge of £4.5 million will be taken in 2002 and the closure is expected to be complete during the first quarter of 2003.

In a further move to refine the Elementis Pigments' product portfolio, the sale of the US based anhydrous aluminium chloride catalyst business for £1.7 million, announced in July 2002, has been completed.

Elementis Specialties has opened a new manufacturing facility in Chanxing, near Nanjing, China to produce organoclays for the rapidly expanding Chinese and Asian markets. The new venture manufactures organoclays from local raw materials, and is presently undergoing upgrading and expansion work that will be completed in early 2003. The Enterprise Resource Planning programme, started in June, is progressing on time and within budget. Global implementation will commence in the second quarter of 2003.

The preliminary results announcement will be made on 27 February 2002.

Source: Elementis plc

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