Elementis (LON:ELM) Increasingly active
The new executive team has set out its stall and taken a visible, significant step towards executing a vigorous strategy of active portfolio management. After a down year in FY16, earnings are on a recovery track this year and a stronger run rate is expected in FY18. The valuation is on a growth footing and, at this early stage, indications support gathering earnings momentum.
Focusing on higher-growth opportunities
FY16 mixed operational performance had been well flagged and results were consistent with this, with some excellent progress offset by areas affected by exogenous (FX and oil price) factors. Momentum in personal care is particularly interesting; it was the fastest growing FY16 subsector (CER FY +14%, H2 +23%), having been backed with additional sales and technical resource. Moreover, the acquisition of SummitReheis (for an expected U$360m, announced on 10 February, completion by mid-year subject to regulatory review) adds scale, profits and synergy fit. Specifically, capability in antiperspirant active ingredients brings significant opportunities to the enlarged subsector. The board was sufficiently confident in future cash generation to maintain the underlying dividend and pay a slightly increased special dividend (together with the final yielding 3.8%).
To read the entire report Please click on the pdf File Below