Shares in Yule Catto & Co PLC (LSE: YULC) were lifted by the specialty chemicals maker’s announcement that it expects underlying pretax profit for the first half to be ahead of the same period a year earlier and that it remains on track to meet its debt reduction targets.
Shares were up 8.3 percent by midday after the group issued a pre-close trading statement ahead of its interim results.
The Polymers business, following a very slow start to the year, has generally seen volumes circa 15 percent down on 2008, but due to favourable currency movements and cost control measures, operating profit for the half year will be ahead of 2008.
At Pharma Chemicals, the benefit of currency effects and the restructuring of the group's Italian plant means that, whilst overall volume has been lower than expected, operating profit will be at a similar level to the first half of 2008.
William Blythe Ltd, Yule Catto’s only remaining Impact Chemicals business, has seen a reduction in volumes, but following the successful restructuring of this business in the first quarter of last year, operating profit will be ahead at the half year.
On a cautious note, the overall economic environment remains difficult. The favourable currency situation has started to reverse to some extent, and oil price rises are likely to make the raw material environment more difficult in Polymers in due course.
“As such, it is difficult to provide guidance for the full year. However, given management's tight focus on cost and the good progress made in the first half, the board now expects profit before tax for the full year to be ahead of current market expectations although still below that of last year,” the company added.
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