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Cookson: 2012 Half Year Financial Report

The main differences between the reported and underlying figures were the pass through to customers of lower commodity metals prices in the Performance Materials division, the disposal of the US Precious Metals Processing business on 1 May 2012, and the acquisitions of SERT and Metallurgica in November 2011 and March 2012 respectively. The underlying decline in revenue reflects the strategy to exit lower margin business in both Advanced Refractories and Performance Materials together with the significant reduction in Fused Silica revenue. Trading profit of GBP 141,2 million was GBP 4,7 million (3 %) lower than that reported in the first half of 2011 with good improvements in the Performance Materials and Precious Metals Processing divisions offset by losses in the Engineered Ceramics division’s Fused Silica business and adverse foreign exchange translation. The Group’s return on sales margin improved to 10,9 % (H1 2011: 10,3 %). The Engineered Ceramics division’s revenue of GBP 819 million was GBP 32 million (4 %) lower than that reported in the same period last year with the Fused Silica business’s revenue of GBP 23 million being GBP 24 million below the prior period figure. The division’s trading profit of GBP 86,6 million was GBP 11,9 million (12 %) below the same period last year with the three principal businesses (Steel Flow Control, Advanced Refractories and Foundry Technologies) combined marginally ahead, but with the Fused Silica business recording a loss of GBP 5 million compared with a profit of GBP 8 milion in the same period last year and a GBP 1 million loss in the second half of 2011. The Fused Silica business has been impacted by the marked downturn in the global solar industry which started in mid-2011 and has proved deeper and more extended than previously anticipated. Further cost reduction plans have recently been implemented involving the closure of the Solar Crucible™ production facility at Moravia in the Czech Republic with effect from 1 July 2012. The Performance Materials division continued to deliver the anticipated strong performance improvement with further penetration of higher growth market segments, such as smartphones and tablets, based on innovative, higher margin products. The division’s revenue of GBP 362 million was GBP 55 million (13 %) lower than that reported in the first half of 2011 but this partially reflected the impact of passing through to customers lower commodity tin, silver and gold prices. Excluding the impact of these commodity metals, underlying revenue was 7 % lower, reflecting the continuing strategy of exiting sales of more commoditised, lower margin products while growing sales of the higher margin products referred to above. The Precious Metals Processing division benefited from the disposal of the US operations, completed on 1 May 2012, and continuing high levels of reclaim business offsetting weakness in retail markets in Europe. In the four months up to disposal, the US business recorded net sales value of GBP 15 million and a trading profit of GBP 1,7 million. The European operations recorded net sales value of GBP 40 million and a trading profit of GBP 7,9 million, in line with the prior year. Overall, the division recorded net sales value of GBP 55 million (H1 2011: GBP 65 million) and trading profit of GBP 9,6 million, an increase of GBP 2,9 million (43 %). (10/2012)  


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