LONDON (ShareCast) – (ShareCast News) – Chemicals group Elementis (LSE: ELM.L – news) saw its first half pre-tax profit decline, as its oil and gas related and businesses reported a drop in sales. The London-listed group said its pre-tax profit fell 9% year-on-year to $ 65.3m (£42m) in the six months to the end of June, as sales fell by the same margin to $ 360.4m.
Elementis’ specialty products business was heavily affected by a decline in activity in the oil and gas industry, as companies in the sector opted to slash spending in the wake of the slump in oil prices that has continued over the last 12 months.
Oilfield revenue plummeted 30%, while coating sales rose 1% on a constant currency basis.
“In the first half of the year, Elementis continued to leverage its strong market positions, geographic diversity and innovative products to deliver growth in most markets,” said group chief executive David Dutro.
“However, our performance was negatively impacted by the ongoing weakness in oil prices and the subsequent reduction in drilling and exploration in North America, as well as some destocking in China in advance of an anticipated market slowdown.” Analysts at N+1 Singer reiterated their ‘corporate’ rating on the stock, adding they considered the results as “reassuring”.
“We consider this a reassuring update and believe that the shares should be well supported at the current level, with the prospect of earnings recovery and a dividend yield well ahead of 4% following a cash upgrade on Tuesday,” they said in a note.
Elementis shares were down 0.68% to 248.60p at 0920 BST on Tuesday.
