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Elementis - Disposals boost specialty chemicals firm’s margins

March 2024

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • ELM
  • Price:
  • 134p
Sometimes the best gains can be made when companies are near the end of a major restructuring and feel confident enough to put out formal growth targets. In the case of speciality chemicals business Elementis, the company has endured a challenging few years, partly due to macro headwinds such as the Pandemic and Ukraine war but also because it’s been weighed down by duds within its portfolio. However, last year it sold off its highly cyclical and low margin chromium business, for around US$107m. This not only more than halved leverage from over 3x net debt / EBITDA to just 1.5x, but also left it with two divisions with decent growth prospects and superior profit margins. Elementis is now enjoying the benefits with its year-end update sta ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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