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[March 2001]
Cookson - announcement of 2000 preliminary results
HIGHLIGHTS OF THE YEAR
Group profits rose sharply Marked improvement in margins and returns Strong organic growth by Electronics division Significant increase in operating cash flow
Financial Summary
2000
1999
Ongoing Operations *
Sales (£m)
2,436
1,615
+51%
Operating Profit (£m)
244
144
+69%
Return on Sales (%)
10.0
8.9
Return on Investment (%)
12.1
11.1
Group
Pre-tax Profit * (£m)
198
149
+33%
Earnings per Share * (p)
20.1
15.5
+30%
Dividends per Share (p)
10.0
9.5
+5%
Operating Cash Flow (£m)
277
171
+62%
*(before exceptional items and goodwill amortisation)
Commenting on the results and current trading, Stephen Howard, Group Chief Executive, said:
"Cookson made considerable progress during 2000. The significant acquisitions made over the last two years have been absorbed into the Group and substantial synergies have been and will continue to be derived. More importantly, the Group achieved meaningful organic growth on a broad front. This, in turn, resulted in record results for Cookson.
With regard to current trading, since the start of the year the electronics industry has experienced a period of de-stocking and a fall in end market demand, especially in the USA. As a consequence, order intake for our Electronics division has slowed, particularly in its equipment business. In time, this de-stocking process will work its way through the system and the electronics industry will return to normal growth rates. For our Ceramics division, its steel and foundry markets in the USA and UK are depressed, whilst those of Continental Europe, Asia and South America are relatively sound.
The expectation is that trading conditions will remain difficult for much of the first half. It is against this background that management has already taken action to address costs in those parts of the Group that are experiencing difficult market conditions. Management will also continue to work to enhance the Group’s strong, global market presence and competitiveness. We believe that the relative resilience of Cookson’s businesses will be manifest in the years ahead."
OVERVIEW
Considerable progress was made during 2000 and profits rose to record levels. Strong organic sales and profit growth was achieved, especially by the Electronics division. Operating margins improved and return on sales increased to 10%. Importantly, return on investment was above the Group’s cost of capital.
The Electronics division absorbed two strategically significant acquisitions during the year. The acquisition and subsequent integration of Enthone into Polyclad Technologies has created the world’s most comprehensive provider of printed circuit board (PCB) fabrication materials. Furthermore, the purchase of Achem has provided low-cost, modern facilities that significantly enhance our laminate manufacturing capacity in the fast-growing Asian electronics markets.
The acquisition in 1999 of Premier Refractories, now being fully integrated into the Ceramics division, has created the world’s largest supplier of flow control refractory systems and services to the steel industry. It has also enabled the division to deliver a resilient performance in what remains a very cost-driven market.
The Precious Metals division expanded its presence in Continental Europe through the acquisition of the jewellery products division of Engelhard-CLAL. It also consolidated its presence in chain manufacture in the USA through the purchase of Excell.
The level of investment and management resource required to integrate these acquisitions into the Group has been significant. Management is focussed on the task of capitalising on the cost savings and strategic advantages that they offer. To date, progress is on track to deliver the benefits envisaged.
The disposals of Neptco, Focas and Polyflex were concluded in the first half and the sale of the Plastic Mouldings business is underway.
Having absorbed a number of significant acquisitions and disposals over the last two years, management was able to direct more attention to enhancing operating performance and delivering productivity-driven process solutions to customers. Through a combination of advanced technological products and unique service offerings, the aim of Cookson’s businesses is to provide customers with greater efficiencies, better yields, shorter downtime and lower reject rates.
Commitment to a process of continuous renewal is absolute. This is evidenced by extensive investment in e-commerce initiatives, IT infrastructure and state-of-the-art manufacturing facilities. In addition, throughout the Group a number of initiatives are underway which are directed at optimising every element of our organisation base, driving down costs and raising customer service levels.
Management is determined to continue to focus on enhancing the Group’s strong, global market positions and increasing its competitiveness. It is also determined to take action to address costs in any part of the Group where market circumstances dictate. By doing so, Cookson will be in the best possible position to deliver sustainable growth and quality earnings.