Elementis (ELM) H2 2025 earnings summary

Executive summary

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

• Transitioned to a pure-play specialty chemicals business by divesting Talc and Chromium, acquiring Alchemy Ingredients, and announcing the sale of the pharmaceutical manufacturing business.

• Launched the Elevate Elementis strategy, targeting mid-single-digit revenue growth and operating margins above 23%, with innovation sales rising to 16.4% of revenue.

• Achieved significant sustainability milestones, including a 77% reduction in carbon intensity and zero lost time accidents.

• Completed strategic divestments and acquisitions to sharpen focus on personal care and coatings.

Financial highlights

• Group revenue was $597.5 million, down 1.9% year-over-year; adjusted operating profit rose 4.6% to $126.7 million.

• Adjusted operating margin increased 150 bps to 21.2%; adjusted EPS up 14.2% to $0.137.

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

• Net debt increased to $185.4 million (1.3x EBITDA); dividend per share up 7.5% to 4.3 cents.

• Returned $79.1 million to shareholders via buyback and dividends.

Outlook and guidance

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

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

• Confident in delivering organic growth through R&D and customer focus in 2026.

• Expect to achieve leverage of ~1x net debt/EBITDA organically by end of 2026.

• Net proceeds from pharma sale expected to be distributed to shareholders upon completion.