Ellis & Everard back on course

The Investment Column

Chemicals group Ellis & Everard went through a torrid patch in the early 1990s. Profits took a hammering after an ill-judged diversification into so-called performance chemicals like cleaners and aerosols had to be reversed. But the group is now back, firmly focused on its profitable niche of buying bulk chemicals from large manufacturers, breaking them down into smaller lots and selling them on to around 60,000 customers, large and small.

Profits have begun to motor in the last few years, with the last of the underperformers being ditched in 1995, and this year looks set to continue the trend. The pre-tax figure grew a fifth to pounds 15.6m in the six months to October and full-year forecasts were being nudged up close to pounds 30m yesterday. The shares, unexciting performers in recent years, put on 9p to 312.5p on the news, taking them to within a few pence of their all- time high.

That looks fully justified by the potential. The group tends to find the going harder in periods of deflation, so the latest figures are impressive given the overall price reduction of 6 per cent in the period and as much as 20 per cent in areas like polymers. Strong positions in both its traditional market in the UK and the US, into which it moved 15 years ago, means Ellis is winning business from customers like Procter & Gamble and Unilever who are focusing their supply requirements on a smaller number of larger players. This, alongside moves to widen and build the product base into areas like surfactants, food chemicals and solvents, helped send volumes 7 per cent higher in the latest six months, offsetting the price erosion.

The prospects for more of the same look good. Ellis is market leader in the UK in distributing commodity chemicals like caustic soda, nitric acid and phosphates, with a market share of around 30 per cent. But there should still be plenty of scope for expanding the speciality chemical side, while its US share remains a minimal 2 per cent despite being the fifth largest operator there.

Strategic advantage is enhanced by its strong environmental position, while the strong pound, if continued, will slice only around pounds 600,000 from translation of second-half figures. On a forward p/e of 14, the shares are good value.

Start your day with The Independent, sign up for daily news emails
News
A poster by Durham Constabulary
news
Arts and Entertainment
books New York Times slammed over summer reading list
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine