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Element earnings improve on income tax benefit

October 28/2020

MOSCOW (MRC) -- Element Solutions reported third-quarter net income of USD36 million, compared to a net loss of USD6 million in the year-ago quarter due largely to favorable income tax benefit, said Chemweek.

Reported adjusted EBITDA of USD101.8 million was down 12% year-on-year (YOY). Net sales were USD478 million, an increase of 3% YOY. Reported adjusted earnings of 22 cts/share were down 15% YOY.

"Element Solutions had a strong third quarter," said Element CEO Benjamin Gliklich. Our automotive and industrially oriented businesses recovered robustly from the second quarter lows, and our high-end electronics business continued its momentum from the first half."

Electronics segment adjusted EBITDA was USD72 million in the quarter, a decrease of 3% YOY. Electronics net sales increased 10% YOY, to USD307 million. Industrial & specialty segment adjusted EBITDA was USD30 million, a decrease of 28% YOY. Industrial & specialty segment net sales decreased 8% YOY, to USD171 million. Excluding the impact of acquisitions, currency, and metals pricing pass through overall organic sales were down 2% YOY.

Element raised its free cash flow forecast to approximately USD215 million for full-year 2020 from a previous forecast of more than USD185 million. The company expects to introduce a 5 ct/share dividend on a quarterly basis pending board approval. This business generates far more free cash flow than it needs to invest internally to fund capex and more than we normally expect to deploy into acquisitions that fit our criteria, Gliklich said. We believe it appropriate to begin to return some of that capital to investors in the form of cash dividends. A 5 ct/share quarterly dividend would equate to approximately 20% of Elements expected annual free cash flow, Element said. We believe that [a dividend] does not materially impact our ability to compound earnings, reduce debt or opportunistically invest in inorganic growth," Gliklich said.

As MRC informed earlier, Element Solutions says it has acquired DMP Corporation (Rock Hill, South Carolina), a provider of turnkey wastewater treatment and recycling products and services for the manufacturing sector.

We remind that Russia's output of chemical products rose in September 2020 by 6.7% year on year. At the same time, production of basic chemicals increased by 6.1% year on year in the first nine months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-September output. Last month's production of primary polymers decreased to 852,000 tonnes from 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan. Overall output of polymers in primary form totalled 7,480,000 tonnes over the stated period, up by 16.4%  year on year.
Author:Anna Larionova
Tags:petroleum products, petrochemistry, petrochemistry.
Category:General News
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