UK Small Caps

LONDON (ShareCast) - Elementis (LSE: ELM.L - news) said trading in the period since 1 July has continued to be in line with expectations, with volumes having stabilised at higher levels than those experienced during the first six months of the year and contribution margins remaining steady.

Customer ordering patterns have improved, but still remain cautious with no evidence of any material restocking at present, the group said. Cost reductions announced at the beginning of the year are benefiting operating profit as planned.

In Specialty Products sales volumes in the third quarter were 10% higher than for the second quarter, although still 17% lower than the same period last year, excluding acquisitions. Volumes improved in all key markets and geographies and business in China has continued to be robust.

In Chromium sales volumes in the third quarter improved by 28% compared to the second quarter, albeit from a low base, and volumes remain over 40% down on the same period last year. The closure of the UK facility, announced at the end of April, is progressing as planned with costs and cash flow in line with expectations.

The group's balance sheet remains strong and existing bank facilities, which were put in place in 2006, are not due for renewal until 2011.