2004 was a further year of achievement of strategic goals and of solid growth for Elementis Specialties. Despite the highly competitive nature of the markets in which we operate, sales increased by approximately 8 per cent, when measured in our operating currency, the US Dollar. Volumes also increased by approximately 6 per cent. Operating profit decreased by approximately 5 per cent on a constant currency basis, due to an adverse product mix and planned increases in the innovation programme and ERP implementation costs.

In terms of key markets, strong sales growth was experienced in coatings, with new application development and new product introductions boosting sales of aqueous coatings by over 17 per cent. Construction sales growth was also strong, in particular to markets in Asia Pacific, Eastern Europe and South America, driven by strong local demand.

The acquisition of Sasol Servo B.V. was completed on 30 June 2004. The acquisition is a key part of Specialties growth strategy and brings with it access to new surface technology chemistry and a European manufacturing centre of excellence for reaction chemistry. Actions to realise firstround integration benefits are under way, with tight cost control and other alignment measures already realising significant operating profit improvement. Annualised synergistic benefits are anticipated to be £3.5 million per annum.

Elementis Specialties continued to invest in innovation during 2004, with the innovation pipeline delivering two product technologies. Technological product differentiation is a further key element of Specialties' growth strategy. The StageGate project management system was upgraded during 2004 and a more stringent business-focused and financial model has been established. The Specialties Innovation programme is targeted with achieving sustainable double-digit growth.

The Elementis ERP system was implemented at Elementis Specialties in December 2003.

1,388
products
as at December 2004


562 staff
as at December 2004



Management team

Neil Carr, President

William French, VP Coatings, Inks, Construction,
Ceramics,Water Treatment

Roger Chantillon, VP Oilfield Chemicals, Consumer
Products, Lubrication, Industrial Applications

Steve Drew, Director Market Development

Zahir Ibrahim, Vice President Finance

Martin Neil, Vice President Operations

Kevin Erickson, Vice President Human Resources

Jim Gambino, Vice President and Chief Technology Officer

Barry Brenner, Vice President Global Purchasing