Luxfer’s first half profits down 18%

SALFORD-based Luxfer, the New York-listed high performance materials group, has reported an 18.6%  fall in half year profits and warned of a challenging second half.

The company said trading conditions in two key sectors, US defence and European automotive were challenging and are expected to remain so.

Although net revenue (excluding rare earth surcharges) for the six months to the end of June was $3.4m higher at $239.6m than H1 2012, trading profit fell due to a “switch in the sales mix”, which saw higher sales in the lower margin Gas Cylinders division and the reverse in the Elektron division.

Profit before tax for the six-month period at $24.9m was $5.7m or 18.6% below the same period in 2012.

Luxfer said: “As indicated in our report on Q1 2013, two key markets, European automotive and U.S. defense, are currently weak as a result of both destocking and reduced end-market demand.

“These two markets mainly affect our Elektron Division. It is clear from the trading conditions seen in Q2 2013 that generally European industrial markets are fragile, with reduced end-demand and knock-on margin pressures.”

The company said that its assumption that European demand would pick up in the second half had not been realised, adding : “the weaker demand is more widespread than just in the automotive market.”

Despite further growth expected in the Gas Cylinders division in the second half, the continuing weakness in Europe will impact the full year figures.

Luxfer said: “We are forecasting to deliver some improvement in the results over the first half of 2013, with the improvement coming in the Gas Cylinders division, but our estimate would be for a trading profit of $60.5m to $63.5m for 2013, in comparative terms down $5m to $8m on 2012, albeit on higher sales revenues.”