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Elementis shares: good news for FTSE 250 chemical stock

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The rising costs raw materials were a small blip on the radar for Elementis, which has reported on a solid first half of the year today. Elementis specialises in chemicals and personal care products and is reporting good sales growth across all regions. It share price on the London Stock Exchange rose on the news.

Elementis is pushing ahead with the development of a personal care products division and also has a robust energy component. The company also confirmed that unplanned production outages at its facilities in Corpus Christi and Castle Hayne plants in Q3 had had limited impact.

Elementis shares hit a high for the year in April at 317, but since then has been struggling to stay above 260-265. Shares have rallied since Tuesday on anticipation of a solid earnings statement.

Elementis also said it was proceeding with the sale of its surfactants business, which it said was progressing well.

“Elementis has delivered another good revenue performance in the third quarter and overall trading is on track,” says Elementis CEO Paul Williams. “Trends remain similar to those reported in the first half of the year and we remain on course to grow operating profit across all three segments in 2017.”

Elementis Specialty Products increased the scale of its personal care division when it bought Summit Reheis this year. This is a high quality, high margin speciality chemicals platform that produces a range of critical active ingredients designed for use in personal care and hygiene products, as well as pharmaceutical and dental.

Elementis shares were trading at the 293 mark following its latest report to the market.



The Armchair Trader says:

Watch out for the currencies market if you are planning on buying Elementis shares and riding them up to the 317 mark. A stronger dollar could have problems in store for the FTSE 250 company. Back in 2015 Elementis shares were punched following revelations that a strong USD hurt its chromium export business.

Elementis is one of the largest producers of chromic acid in the US. But around 40% of its chromium business in the country is destined for export. If the USD climbs, it makes it harder for Elementis to compete against cheaper sources from Russia and Kazakhstan.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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