Elementis (ELM) H2 2025 earnings summary

Executive summary

• Achieved strong profit and margin growth despite soft demand, driven by strategic portfolio transformation, operational improvements, and the Elevate Elementis strategy.

• Transitioned to a pure-play specialty chemicals business by selling Talc, Chromium, and pharmaceutical businesses, and acquiring Alchemy Ingredients to strengthen the personal care segment.

• Innovation sales rose to a record 16.4% of revenue, with a medium-term target of 20%.

• Achieved significant sustainability milestones, including an 80% reduction in carbon footprint since 2019 and zero lost time accidents.

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 finance costs and share buybacks.

• Group revenue declined 1.9% year-over-year to $597.5 million; personal care up 2.4% to $224.5 million, coatings down 4.3% to $373 million.

• 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 leverage at 1.3x EBITDA.

Outlook and guidance

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

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

• Confident in delivering organic growth, best-in-class customer service, and further operational efficiency in 2026.

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

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