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Mid Cap
Market Cap £996.4m
Enterprise Value £1.36bn
Revenue £1.79bn
Position in Universe 410th / 1816

Interim Management Statement

Thu 12th May, 2011 7:00am
RNS Number : 4407G
Cookson Group PLC
12 May 2011

12 May 2011

COOKSON GROUP PLC ("Cookson" or "the Group")


Cookson Group plc, a leading materials science company, releases its Interim Management Statement regarding current trading, financial position and outlook ahead of today's Annual General Meeting.  The Statement covers the period from 1 January 2011 to 11 May 2011. 

At the AGM the Chairman, Jeff Harris, will say:

"The excellent results achieved in 2010 demonstrate how well Cookson has now recovered from the effects of the 2008/09 global economic crisis.  The Group is positioned for considerable further improvement in its performance, as indicated by the targets for the next three years we announced in our January 2011 strategy presentation which include delivering double digit annual average earnings growth over this period.

Trading over the first four months of 2011, as summarised in today's Interim Management Statement, has been very encouraging and reaffirms our confidence that the Group's performance in 2011 will be well ahead of 2010 and we remain on track to achieve our targets for 2013."

Interim Management Statement:

Overview and Outlook

Over the first four months of 2011, the Group has recorded significant revenue growth reflecting strong end-market demand combined with the pass through to customers of significant commodity price rises for tin, silver and gold in the Electronics and Precious Metals divisions.  The progressive improvement in the Group's return on sales margin seen last year has continued and our trading profit in the first four months of 2011 has been in line with our previous expectations.

For full year 2011, we continue to expect mid-single digit growth in global steel production, slightly higher growth in electronic equipment production, and double digit growth rates in our foundry castings and fused silica end-markets.  The significant cost reduction measures implemented in the first half of 2009, the continuing market penetration of new, higher margin products, and the production capacity expansion projects completed in 2010 and currently underway, mean that the Group is well positioned to benefit from these positive end-market growth trends.


Accordingly, we continue to expect that the Group's performance in 2011, at both the half year and full year, will be well ahead of the equivalent periods in 2010.


Global steel production in the first quarter of 2011 (according to the World Steel Association ("WSA")) was 9% higher than in the first quarter of 2010 and our Flow Control and Linings businesses have grown in line with this trend.  On 18 April, the WSA issued a new short range forecast for global steel use, revising the 2011 growth estimate to 5.9% from its previous forecast of 5.3% (world excluding China revised to 6.6% from 6.8%).  They also published for the first time a forecast for 2012, which predicts growth in global apparent steel use of 6.0% (world excluding China 6.8%).

As expected we have seen particularly strong growth in our Foundry business reflecting the continued recovery in the global foundry castings market.  The recent positive news flow from major castings users such as the truck, mining and agricultural equipment manufacturers points to the continuation of this trend.

The Fused Silica business has also seen significantly increased demand from the solar wafer manufacturers.

The Ceramics division has experienced more significant increases in raw material prices than in previous years and we are in the process of passing on these additional costs to our customers through higher sales prices.  In some instances there will be a short time lag before these become effective, but the negative impact on trading profit of this time lag has not been material.

We expect the division's overall performance in the first half of 2011 to continue the improving trend seen during 2010.


Revenue growth has been encouraging and significantly inflated by the pass through of very high tin, silver and gold commodity prices. Underlying end-market demand has been in line with our expectations with high single digit growth driven particularly by the smartphone, tablet and automotive electronics segments.  We continue to experience good growth in sales of innovative, higher margin, products such as advanced solder pastes, copper damascene and our tape and reel packaged solder preforms.  The plating-on-plastics product line has also seen strong growth worldwide, reflecting the recovery in automotive markets.  As a result, we continue to expect the division's first half performance in 2011 to be substantially ahead of the equivalent period last year and marginally ahead of the seasonally stronger second half of 2010.

Precious Metals

Prior year trends have continued with weak retail markets being offset by high levels of reclaim activity in Europe and coin blank sales to the US Mint.  The division is expected to deliver a similar performance in the first half of 2011 to that of both halves of 2010.


To date we have experienced no material impact on our activities from the Japanese earthquake and tsunami disaster.  In 2010, our total Japanese revenue amounted to £55m, around 2% of the Group's total revenue, with the majority relating to our Foundry business.  We are pleased to report that all our 190 employees in Japan are unharmed and there has been no damage to our production facilities.  There has been speculation that supply chain shortages from Japan will affect production schedules globally, particularly for electronics and automotive manufacturers, and hence potentially affect short term demand for the consumable products we supply to these manufacturers.  To date there has been no noticeable disruption to our customers' production schedules or their ordering from us, and none of our customers have notified us of any impending material slow down.  If there were to be any such slowdown we would expect it to be relatively short term with a subsequent "catch-up", since it would be a supply rather than a demand issue.

Financial Condition

As previously indicated, working capital trends in 2011 are expected to reflect normal seasonality with a build-up of working capital in the first half of the year and some reduction in the second half.  Overlaying this normal seasonality, working capital in the first half of 2011 is expected to reflect the strong growth in underlying revenue and, if they continue throughout the second quarter, the high level of commodity metal prices. 

On 14 April, we announced the signing of a new £600m, five year Revolving Credit Facility with a group of sixteen banks to replace the existing bank facility which was due to mature in October 2012.  This followed the successful issue in December 2010 of US$250m of private placement loan notes with an average maturity of 8.5 years.

The Group is operating well within our management target of a net debt to EBITDA ratio not to exceed 1.5 times (versus the new covenant limit of 3.25 times).  Hence the Group's financial position is very strong with low leverage and ample liquidity under long term financing arrangements.

Board changes

Barry Perry joined the Board as a non-executive director in January 2002.  Having now served for just over nine years, Barry will not be offering himself for re-election at today's AGM and will therefore retire from the Board at the end of the meeting.  The Board would like to record its sincere thanks to Barry for his considerable contribution to Cookson over many years.

Following the AGM, Cookson's board will comprise the Chairman, three executive directors and four non-executive directors.

Conference call


Nick Salmon (Chief Executive) and Mike Butterworth (Group Finance Director) will be hosting a conference call for analysts and investors at 8.00am (UK time) today (12 May). To join the call, please use the dial in number below:


Conference call:

+44 (0)207 138 0816 all participants

Confirmation code: 3501477


A replay of the call will be available one hour after the event for two weeks on the following number:



+44 (0)207 111 1244 non-US participants

+1 347 366 9565 US participants

Confirmation code: 3501477#

Further announcements


Cookson's half year results for the six months ending 30 June 2011 are expected to be announced in early August 2011.


-    Ends -


For further information please contact:


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

Anthony Arthur                                                           Tel: +44 (0)20 3128 8100


About Cookson Group plc:


Cookson Group plc is a leading materials science company operating on a worldwide basis in Ceramics, Electronics and Precious Metals markets.


The 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 ceramic products to the glass and solar industries.  It is also a regional leader in the US, UK and Australia in the supply and installation of monolithic refractory linings.


The Electronics division is a leading supplier of advanced surface treatment and plating chemicals and assembly materials 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 US, the UK, France and Spain, and also has significant precious metal recycling operations in Europe.


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   



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