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[August 2008]
Cookson Group Half Year
Highlights from the Cookson Group announcement for the half-year are as follows:• Further strong improvement in performance:
- Revenue of £1,058 million, up 26%*
- Trading profit of £113 million, up 30%*
- Return on sales up 0.7 percentage points to 10.7%
• Significant growth in Ceramics, including a better than expected contribution from recently-acquired Foseco. Ceramics now represents over 75% of total Group trading profit
• Foseco integration proceeding well with synergy savings reconfirmed
• Electronics maintaining its performance at 2007 levels; Precious Metals remaining profitable
• Headline PBT and EPS up 45% and 32% respectively
• Interim dividend of 5.85 pence per share, up 38%
• Strong improvement in free cash flow, with inflow of £7 million compared to £37 million outflow in first half 2007
• Anticipate a continued strong improvement in full year performance
* at constant currencyCommenting on the Group’s results and outlook, Nick Salmon, Chief Executive, said: “The Group has delivered a very strong improvement in its results, driven by the continued strong performance of our Ceramics division, augmented by a contribution ahead of our expectations from Foseco, acquired in April.
“For the second half, continued growth in the global production of steel, foundry castings and solar panels should support a further strong improvement in the performance of the Ceramics division, benefiting from a full period contribution from Foseco and from our continuing investment in capacity in higher growth, higher margin areas.
“The Electronics division is expected to continue to maintain performance around 2007 levels. The Precious Metals division is expected to remain profitable despite the weak retail jewellery markets.
“Cookson’s profile has been transformed over the past few years. As well as delivering a marked improvement in financial performance, this transformation has left the Group much less cyclical and therefore more resilient.
“Against this background, we anticipate a continued strong improvement in our full year performance.”
The Ceramics Division, the enlarged division which now trades under the Foseco brand in foundry markets and the Vesuvius brand in all other markets, performed very strongly in the first half of 2008 with revenue of £582 million, up 51%, and trading profit of £85.1 million, an increase of 62% (both at reported exchange rates), giving a return on sales margin of 14.6%.
Excluding the contribution from Foseco, underlying revenue was up 8%, trading profit was up 10% (both at constant exchange rates) and the return on sales margin increased to 14.3%, compared to 13.6% for the first six months of 2007.
End-markets have continued to grow. Global steel production, the main end-market, grew 5.7% compared with the first six months of 2007, which was in line with expectations. A similar growth rate for global steel production is expected in the second half of the year. The foundry castings market has been generally strong, particularly in Brazil, Germany, India and China. Solar panel production, the end market for Vesuvius’ Solar Crucibles™, has continued its very high growth trend.
The results reflect these end-market growth trends, together with the benefits of Cookson’s on-going investments in expanding production capacities in China, Poland, Czech Republic, India and Mexico.
Sales of steel flow control products (including VISO™ and slidegates), used in the enclosed continuous casting process, grew 6%. The VISO™ joint venture with Wuhan Iron and Steel (WISCO), announced in October 2007, started production in July. The new VISO™ production line under construction in Ostend, Belgium, should start production by year end. Agreements have also recently been signed with the local and regional authorities in Nizhny Novgorod, Russia, under which a new £10 million VISO™ plant will be constructed, to be operational in 2010.
Linings sales grew 17% to £195 million and the return on sales margin improved to 9.1% (pre divisional and central cost allocations), representing encouraging progress towards the medium term target of 10%. Fused silica revenue grew 29% to £35 million driven by a 64% growth in sales of Solar Crucibles™. In March 2008, the extension to the Solar Crucible™ facility in Moravia, Czech Republic, started production and two new Solar Crucible™ factories are currently under construction in China, for completion by the year end.
www.cooksongroup.co.uk
ENDS