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(Sharecast News) - Specialty chemicals company Elementis said it has made a good start to the year despite the absence of a "positive step change" in demand, as it reiterated its confidence in hitting market forecasts in 2024.
The company said that revenues were up 3% year-on-year at constant currency in the first quarter ended 31 March, with adjusted operating profit rising by a double-digit percentage and operating margins showing "material improvement".
Sales in the Personal Care division were flat, while Performance Specialties saw sales and profits rise on weak comparatives.
"The year has started well. Whilst we have not yet seen a positive step change in the demand environment, we remain confident about our ability to deliver profit growth and margin improvement in line with expectations," Elementis said.
Current consensus estimates are for an adjusted operating profit in 2024 of $117m at an adjusted operating margin of 15.8%, up from $104m and 14.6% in 2023, respectively.
On Monday, activist investor Gatemore Capital Management said in an open letter that Elementis was an attractive company that has "lost its direction" as it called for the chief executive to be replaced.
Gatemore urged the company to accelerate and confirm the details around its announced cost-savings programme, replace the current CEO and conduct a strategic review of the portfolio "with the aim of refocussing the business and making it more attractive for a strategic buyer".
Specifically, Gatemore highlighted concerns about management's mid-term profitability guidance, with operating profit margin targets rising to 19% despite the company not achieving its prior 17% target in 2023.
The stock was up 1.4% at 144.20p by 0831 BST.
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