Elementis (LON:ELM) reported 2025 results that management said demonstrated “strong profit growth and margin expansion” despite what the company described as a soft demand environment, particularly in coatings. In the presentation, CEO Luc van Ravenstein highlighted continued portfolio reshaping, progress under the company’s “Elevate Elementis” strategy, and an early-2026 trading start he characterized as solid following a relatively soft fourth quarter.
Portfolio reshaping and strategic focus
Management emphasized that Elementis has “fundamentally transformed” into a pure-play specialty chemicals business focused on two segments: personal care and coatings. Van Ravenstein pointed to the prior exits from chromium (sold in 2023) and talc as deliberate moves away from commoditized, capital-intensive operations.
According to Elementis, the sale is expected to be a “straightforward, clean transaction,” reducing capital intensity and, on a pro forma basis, lifting 2025 group operating margins. The company said it is working toward completion in the second quarter.
2025 financial performance
New CFO Kath Nairn said 2024 comparative figures were restated for continuing operations following the talc divestment. She reported group revenue of $597.5 million, down 1% on a reported basis and down 1.9% on a constant-currency basis. Nairn said foreign exchange provided an approximate $5.2 million tailwind.
In revenue bridging commentary, management cited:
- Weak demand in coatings as a headwind, partly offset by volume growth in personal care.
- $7.8 million of pricing delivered “across both businesses.”
- Mix pressure, including the absence of $3.4 million of one-off coatings sales recorded in 2024 and ongoing softness in industrial and decorative end markets.
Nairn also said proactive pricing, procurement agility, and supply chain optimization actions “fully offset the direct impact of tariffs” in the year, and that the company believed the latest developments as of Saturday, 21 February left Elementis “in a neutral position” on tariffs.
Adjusted operating profit increased 4.6% to $126.7 million, supported by net price gains after inflation and cost actions. Adjusted operating margin improved 150 basis points to 21.2%. Nairn attributed part of the performance to self-help initiatives, including $80 million of total cost savings delivered during the year.
Adjusted earnings per share rose 14.2% to $0.137, which management said reflected stronger operating profit as well as lower net finance costs and a reduced share count following a buyback.
Segment performance: personal care and coatings
Personal care revenue increased 2.4% to $224.5 million, with management citing strong growth in skincare and cosmetics that offset a slight decline in antiperspirant (AP) actives. Regionally, Elementis reported higher revenues in EMEIA and the Americas, with Asia flat year over year. Adjusted operating profit rose 16.9% to $72.8 million, which Nairn said brought the segment’s absolute profitability in line with coatings. Personal care margin increased 410 basis points to 32.4%, including benefits from “one-off volume and cost savings” in the first half.
In Q&A, management noted that personal care in Asia remains smaller relative to Europe and the U.S., and pointed to order timing in Korea’s color cosmetics market as a factor in a softer first half followed by a better second half. Management also discussed a consumer-driven format shift in Latin America from aerosol to roll-on in antiperspirants, which contributed to softness in the fourth quarter.
Coatings revenue declined to $373.0 million from $386.4 million, with Elementis attributing the decline in coatings demand partly offset by a strong performance from the energy business. Adjusted operating profit was $70.4 million, lower year over year, and operating margin was 18.9% compared with 20.3% in the prior year. Management cited the absence of high-margin one-off sales in the prior-year fourth quarter as a factor.
Nairn and van Ravenstein also discussed operational improvements at the St. Louis site, where earlier backlogs had weighed on coatings performance. Management said a debottlenecking program was progressing well, and the CEO later said St. Louis performance had improved 20% since the first half of 2025, putting the site “two-thirds of the way” toward the capacity unlock target discussed previously.
Cash flow, balance sheet, and shareholder returns
Elementis generated free cash flow of $41 million in 2025 compared with $51 million a year earlier. Nairn said higher adjusted EBITDA was more than offset by a working capital outflow, driven by higher receivables due to lower debt factoring and a strategic inventory build, as well as higher capital expenditure to support adjacent market growth and the St. Louis improvement program.
Net debt ended the year at $185.4 million, with net debt to EBITDA at 1.3x following the Alchemy acquisition and shareholder distributions. The company returned $79.1 million through its first buyback program and dividends, and Nairn said the buyback resulted in the purchase and cancellation of approximately 4% of issued share capital. The company also disclosed the disposal of the disused Eaglescliffe site for negative cash consideration of $11.1 million, noting reduced environmental liabilities and provisions alongside the talc and Eaglescliffe divestments.
The board recommended a final dividend of GBP 0.03, taking the full-year dividend to GBP 0.043, up 7.5% year over year and representing a 31% payout ratio, in line with its policy of around 30% of adjusted earnings. Management added that, following completion of the pharmaceutical manufacturing disposal, it expects to distribute the net proceeds to shareholders and will update investors upon closing.
Strategy progress and 2026 outlook
Van Ravenstein reiterated the company’s “Elevate Elementis” strategy, built around three priorities: top-line growth, service delivery, and simplification and agility. The company’s medium-term targets include mid-single-digit revenue growth, operating margins above 23%, three-year operating cash conversion above 90%, and ROCE excluding goodwill above 30%. Management said the talc sale enabled it to accelerate delivery of its 2026 targets by one year.
On innovation, management said innovation sales reached a record 16.4%, doubling over five years, and that the company launched 19 new products and sent more than 1,500 samples to customers. The CEO said Elementis is investing 50% more in R&D, including establishing a hectorite center of excellence, and reiterated an ambition to move toward 20% innovation sales over the medium term.
For early 2026 trading, management said the company had a “solid start” to the year, including in coatings, and expects seasonality to be typical, with a 52/48 first-half/second-half split. In response to questions on 2026 expectations, management said it was comfortable with market consensus and cited incremental cost savings, volume growth, and margin accretion as elements supporting year-on-year progression. Nairn also provided technical guidance that 2026 capex is expected to be 4%–5% of revenue and said the company expects a small working capital outflow, noting that factoring present at the end of 2025 would unwind and not be used in 2026.
About Elementis (LON:ELM)
Elementis is a global specialty chemicals company. We offer performance-driven additives that help create innovative formulations for consumer and industrial applications. As a FTSE 250 company, listed on the London Stock Exchange, we employ c.1,030 people globally. We have a nearly 200-year tradition of creating ingredients that add value to everyday consumer and industrial products. In 2024 Elementis reported revenue of $738m and adjusted operating profit of $129m.
