H1 Highlights
Robust operating performance in Europe and North America ('ENA'):
o Operating profit stable in constant currency when excluding prudent accrual of employee performance bonuses.
o Good progress in Construction & Coatings, Functional Polymers and Foam markets compensating for challenging Paper and Carpet markets.
Strong operating performance in Asia and Rest of the World ('ARW'):
o Reflecting improved market conditions and successful innovation initiatives.
o Volumes and margins rose significantly across all regions and markets relative to a weaker H1 2014.
R&D: Continued focus on innovation with products launched in last 5 years representing 16% of sales.
Good operational progress: Reorganised executive team to increase focus and accountability; this new executive team will relocate to an operational London HQ from September. The review to optimise the assets across the Group is underway and progressing well.
Debt: Strong cash generation helped drive net debt lower to £77.2 million (31 December 2014: £112.1 million), before £42.8 million dividend payments on 3 July 2015.
Earnings per share: Up 14.9% at 11.6p per share.
Dividend: Interim dividend is increased by 6.7% from 3.0 to 3.2 pence per share.
Commenting on the results, Neil Johnson, Chairman, said:
"It is three years since the Group reported an improvement in the underlying profitability at the half year, and I am pleased to report a promising start to 2015.
In the Europe and North America segment, our strategy is focused on innovation, margin improvement and tight cost control to drive performance. Whilst we continue to face the challenges of operating in the European Paper and Carpet markets, we have been successful in developing and growing our other businesses operating in higher margin markets including the Construction & Coatings, Functional Polymers and Foam markets.
In the Asia and RoW segment, our strategy of investing in innovation and capacity, coupled with strengthening demand, has resulted in an exceptional six months trading performance, significantly higher than the weaker comparative period. All regions and businesses have been trading well, with higher volumes and margins, with our Nitrile Latex business in Asia being the primary driver.
Looking forward, we expect Europe and North America overall to continue at similar volumes and margins excepting the normally slower periods of August and December. In Asia and Rest of the World, we expect to continue to trade well ahead of the prior year, and broadly in line with the strong first half. Notwithstanding increased currency headwinds, overall the Board's expectations for the full year remain unchanged".
