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[December 2008]
Cookson Group Interim Statement
Cookson Group plc released the following as part of its Interim Management Statement regarding current trading, its financial position and the outlook for 2008 and 2009. This statement covers the period from 1 July 2008 to 10 November 2008:
“Introduction
In recent weeks the Group has started to see clear evidence of the global financial turmoil impacting its end-markets, particularly global steel production. These weakening market conditions are being reflected in industry statistics and recent equity analysts’ research. As a result, although overall performance for the year will still be significantly ahead of 2007 reflecting the addition of Foseco’s contribution and continuing currency translation gains, full year performance for 2008 is now anticipated to be below management’s earlier expectations.The weaker end-market conditions are expected to prevail throughout the fourth quarter and into 2009, and management has initiated appropriate and decisive actions across the Group to mitigate the effects of this slowdown.
Ceramics
According to the latest World Steel Association statistics, global steel production, the main endmarket for our Steel Flow Control and Linings businesses, fell 3.2% in September compared to the same month last year, giving a growth rate for the nine months year to date of 4.6%. The sharply declining growth rate was principally driven by China where production in September was 9.1% lower than the same month last year. Global steel production figures are not yet available for October, but in recent weeks producers in most regions have been announcing production cuts to reduce inventories and to support prices for finished steel. The duration of these production cuts is as yet unclear and, as a result, it is not possible to gauge the likely level of steel production in the full year 2009, but we are encouraged that the global steel industry appears to be reacting much more quickly to the slowing demand than in previous downturns. The division is managing its operations on the assumption of a significant reduction in global steel production in the remainder of 2008 and in the first quarter of 2009.The Foseco Foundry business has recently seen some slowing in activity compared with the high levels experienced over the first nine months of the year and, given the current difficult economic environment, weaker growth is expected in the fourth quarter of 2008. The integration of Foseco continues to make good progress and is on track to deliver the targeted synergy cost savings of £6 million in 2008 and a further £12 million in 2009.
Fused Silica growth remains strong, driven by demand for Solar Crucibles™ used in the production of solar cells.
For the Ceramics division as a whole, underlying performance for the full year 2008 (on a pro forma basis for Foseco and at constant currency) is now expected to be in line with 2007.”
The Interim Statement also reported on Electronics, Precious Metals, Currency, Financial Position and Outlook and these are all covered by the full text on the website.
ENDS