TIDMCKSN
RNS Number : 1079O
Cookson Group PLC
08 October 2012
8 October 2012
COOKSON GROUP PLC ("Cookson" or "the Group")
INTERIM MANAGEMENT STATEMENT
Cookson Group plc, a leading materials science company, releases
the following Interim Management Statement covering current
trading, its financial position and outlook. This statement covers
the period from 1 July 2012 to 7 October 2012.
Overview
The trading performance in the third quarter for the Performance
Materials and Precious Metals Processing divisions has been in line
with expectations and, for both divisions, the full year outlook
remains unchanged.
However, for the Engineered Ceramics division end-market trends
and trading performance in the third quarter, and in particular
over the last month, have been weaker than previous expectations.
Assuming a continuation of current end-market conditions, the
Engineered Ceramics division's performance in the second half of
2012 is now expected to be substantially below both the first half
and previous expectations.
As a result, full year performance for the Group as a whole is
now expected to be materially below the Board's previous
expectations.
Engineered Ceramics
The division is the world leader in the supply of advanced
consumable products and systems to the global steel industry (which
accounts for a little over half of revenue) and the global foundry
industry (approximately one third of revenue) and a leading
supplier of speciality products to the glass and solar
industries.
Average monthly steel production volumes in July and August
(according to the World Steel Association ("WSA")) declined by some
3% for the world excluding China (1% for the world as a whole) when
compared to the average monthly run rate in the first half of the
year. Most notably, Europe (27 countries) was 11% lower and the US
3% lower, both slightly more pronounced than the normal seasonal
downturn. In September, rather than the normal seasonal
strengthening, there have been signs of some further weakening in
steel production volume trends, particularly in the US, Europe and
Brazil. The performance of our steel-related businesses, Steel Flow
Control and Advanced Refractories, has reflected these weak market
trends.
For our Foundry castings end-markets, news flow from the
ultimate end-markets, such as heavy truck, higher-end automotive,
wind turbines, and construction, mining and agricultural equipment,
is indicating a further general slowdown in production levels that
had started to become evident towards the end of the second
quarter. This trend, which has affected the majority of geographic
regions, has inevitably led to a further slow-down in demand in our
Foundry Technologies business from that experienced in the second
quarter.
The global solar industry, which is the key end-market for our
Fused Silica business' Solar Crucibles(TM), continues to be very
depressed and selling prices of Solar Crucibles(TM) continue to be
under severe pressure. In July, the closure of the Solar
Crucible(TM) production facility in the Czech Republic was
announced, and in view of the continuing weakness in the
end-market, the decision has now been taken to also close one of
the two Chinese Solar Crucible(TM) production facilities with
immediate effect. This will result in a non-cash asset write off of
GBP16 million together with cash related restructuring costs of
GBP1 million.
More generally, management action has been taken throughout the
division's activities to respond to the current difficult trading
environment e.g. by reducing temporary workers and overtime, a
hiring freeze and curtailment of discretionary costs. In a number
of countries negotiations have now been initiated with the relevant
authorities regarding government subsidised working hour reduction
schemes. More substantial restructuring and cost reduction measures
will be implemented as necessary.
Performance Materials
The division is a world leading supplier of electronic assembly
materials and advanced surface treatment and plating chemicals. The
electronic equipment production end-market accounts for
approximately three-quarters of revenue with the other quarter
being direct, non-electronics, applications in automotive and
industrial production.
Overall trading in the third quarter has been in line with
expectations. The Assembly Materials business has benefited from
second half seasonality in consumer electronics manufacture,
augmented by a continuing pick up in smartphone and tablet volumes.
Conversely the Surface Chemistries business has seen moderately
slowing demand for performance and decorative coatings principally
used in the automotive industry (particularly in Europe), and, more
recently, products used in the fabrication and packaging of
semiconductors.
There continues to be good growth in sales of more recently
introduced innovative products such as 'tape and reel' packaged
solder pre-forms, immersion tin PCB surface finishes, and PV
ribbon. The first confirmed commercial orders for our newly
launched Argomax(TM) nano-silver, low temperature sintering
die-attach material have recently been received.
The Board's expectations for full year performance remain
unchanged.
Precious Metals Processing
The division is a leading supplier of fabricated precious metals
to the jewellery industry in the UK, France and Spain and also has
significant precious metals recycling operations.
Trading in the third quarter, which reflected the normal
seasonal trends, was satisfactory and expectations for the full
year remain unchanged.
Financial Condition
In line with the Group's normal seasonality, net debt should
reduce significantly over the remainder of the second half of the
year from the GBP451 million as at 30 June 2012, such that previous
expectations for net debt at year end remain unchanged. The Group's
financial position is robust with low levels of leverage and ample
liquidity headroom under long term financing arrangements.
Outlook
The global macro-economic environment remains uncertain and
difficult to predict.
Assuming a continuation of current end-market conditions, the
Engineered Ceramics division's performance in the second half of
2012 is now expected to be substantially below both the first half
and previous expectations. We continue to expect the Performance
Materials division's second half performance to be slightly ahead
of the first half, and the Precious Metals Processing division is
also expected to deliver a performance in line with previous
expectations. The foreign exchange translation impact in the second
half of the year is expected to be similar to that experienced in
the first half.
In light of the conditions being experienced by the Engineered
Ceramics division, full year performance for the Group as a whole
is now expected to be materially below the Board's previous
expectations.
Strategic Review
Further to the update at the time of the 2012 half year results,
the review of the strategic portfolio options for the Group,
including a potential demerger or separation of Cookson's main
divisions, is progressing well. The Board still expects to update
shareholders on the outcome of the review before the end of the
year.
Conference call
Nick Salmon (Chief Executive) and Mike Butterworth (Group
Finance Director) will be hosting a conference call for analysts
and investors at 8am (UK time) today:
Conference call:
+44 (0)203 140 8286 all participants
Confirmation code: 2614520
A replay of the call will be available one hour after the event
for two weeks on the following numbers:
Replay:
+44 (0)203 427 0598 non-US participants
+1 347 366 9565 US participants
Confirmation code: 2614520#
- Ends -
Shareholder/analyst enquiries:
Nick Salmon, Chief Executive Cookson Group plc
Mike Butterworth, Group Finance Director Tel: + 44 (0)20 7822 0000
Media enquiries:
John Olsen MHP Communications
Andrew Jacques Tel: +44 (0)20 3128 8100
Ian Payne +44 (0)7770 272082
About Cookson Group plc:
Cookson Group plc is a leading materials science company
operating on a worldwide basis.
The Engineered Ceramics division is the world leader in the
supply of advanced consumable refractory products and systems to
the global steel and foundry industries and a leading supplier of
speciality products to the glass and solar industries.
The Performance Materials division is a leading supplier of
electronic assembly materials and advanced surface treatment and
plating chemicals to the electronics, automotive, industrial and
construction markets.
The Precious Metals division is a leading supplier of fabricated
precious metals (primarily gold, silver and platinum) to the
jewellery industry in the UK, France and Spain, and also has
significant precious metal recycling operations.
Forward looking statements
This announcement contains certain forward looking statements
which may include reference to one or more of the following: the
Group's financial condition, results of operations, cash flows,
dividends, financing plans, business strategies, operating
efficiencies or synergies, budgets, capital and other expenditures,
competitive positions, growth opportunities for existing products,
plans and objectives of management and other matters.
Statements in this announcement that are not historical facts
are hereby identified as "forward looking statements". Such forward
looking statements, including, without limitation, those relating
to the future business prospects, revenue, working capital,
liquidity, capital needs, interest costs and income, in each case
relating to Cookson, wherever they occur in this announcement, are
necessarily based on assumptions reflecting the views of Cookson
and involve a number of known and unknown risks, uncertainties and
other factors that could cause actual results, performance or
achievements to differ materially from those expressed or implied
by the forward looking statements. Such forward looking statements
should, therefore, be considered in light of various important
factors. Important factors that could cause actual results to
differ materially from estimates or projections contained in the
forward looking statements include without limitation: economic and
business cycles; the terms and conditions of Cookson's financing
arrangements; foreign currency rate fluctuations; competition in
Cookson's principal markets; acquisitions or disposals of
businesses or assets; and trends in Cookson's principal
industries.
The foregoing list of important factors is not exhaustive. When
relying on forward looking statements, careful consideration should
be given to the foregoing factors and other uncertainties and
events, as well as factors described in documents the Company files
with the UK regulator from time to time including its annual
reports and accounts.
Such forward looking statements speak only as of the date on
which they are made. Except as required by the Rules of the UK
Listing Authority and the London Stock Exchange and applicable law,
Cookson undertakes no obligation to update publicly or revise any
forward looking statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties
and assumptions, the forward looking events discussed in this
announcement might not occur.
Cookson Group plc, 165 Fleet Street, London EC4A 2AE
Registered in England and Wales No. 251977
www.cooksongroup.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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