Elementis (ELM) H2 2025 earnings summary

Executive summary

• Achieved strong profit growth and margin expansion despite a soft demand environment and slight revenue decline, demonstrating business resilience and quality.

• Completed strategic divestments of Talc and Chromium, transforming into a pure-play specialty chemicals business focused on personal care and coatings, and acquired Alchemy Ingredients.

• Announced sale of the pharmaceutical business to ABF for ~$40m, further sharpening strategic focus and expected to uplift 2025 group operating margins.

• Launched the Elevate Elementis strategy, targeting mid-single-digit revenue growth, >23% operating margins, and >90% three-year operating cash conversion, with innovation sales rising to 16.4%.

• Achieved zero lost time accidents and significantly reduced carbon footprint by nearly 80% since 2019, including a 77% reduction in carbon intensity.

Financial highlights

• Adjusted operating profit grew 4.6% to $126.7 million, with a 150 basis point margin improvement to 21.2%.

• Adjusted EPS increased 14.2% to $0.137, aided by lower net finance costs and share buyback.

• Group revenue declined 1.9% year-over-year to $597.5 million, with coatings volumes down but personal care volumes up.

• Free cash flow was $41 million, down from $51 million, due to working capital outflow and higher CapEx.

• Net debt ended at $185.4 million, with net debt/EBITDA at 1.3x after acquisitions and shareholder returns.

Outlook and guidance

• Confident in delivering organic growth through R&D, customer intimacy, best-in-class service, and operational efficiency in 2026.

• New mid-term targets: mid-single-digit revenue growth, operating margin above 23%, operating cash conversion above 90%, and ROCE above 30%.

• 2026 guidance: capex at 4-5% of revenue, net finance costs ~$20m, effective tax rate ~25%.

• Board recommended a final dividend of GBP 0.03, full year up 7.5% to GBP 0.043 (31% payout ratio).

• Proceeds from pharma business sale expected to be distributed to shareholders upon completion.