Cookson Reports H2 Revival in Sales and Margins

SHANGHAI, Mar. 4 -- Cookson Group, the world's largest solder producer, reported much improved results in the July-December 2009 half year, as the acute de-stocking seen in the electronics and steel sectors in H1 abated. Apart from solders, the Group's other main products are ceramics for the steel industry and precious metals. In a statement today Cookson also noted that "the improvement in steel production and electronics end-markets experienced in the second half of 2009 has continued so far into 2010." For the full year 2009 underlying sales of electronic assembly materials (solders) fell by 22% after adjusting for changes in raw material prices and exchange rates. However this was due to a 33% year-on-year decline in the first half. Second half sales were 19% higher than in the first half. There were also changes in product mix: "Sales of higher margin, more value-added products such as solder paste were less affected, with volumes unchanged between years, whereas volumes for the more commoditised products such as bar solder were down 30%. This trend reflected the continuing shift from wave soldering to surface mount technology for the production of PCB's."

Commenting on the recent swings in market conditions, the company said that "the slowdown in demand started in the last quarter of 2008 and reflected both a weakening in end-markets (notably for consumer electronics and automotive) and a marked de-stocking of components and finished products within the supply chain. However, since late March, electronic materials end-markets progressively improved as customer de-stocking came to an end and end markets recovered. According to Henderson Ventures, electronic equipment production worldwide, which had experienced high single-digit annual growth rates in the five years preceding the downturn in late 2008, reduced by 11% by value in 2009 compared to 2008. Two of the key products within the consumer electronics market are mobile phone handsets and personal computers. Mobile phone handset volumes were down 3% compared to 2008 (following 7% growth in 2008) whilst personal computer volumes, including laptops and netbooks, were up 5% compared to 2008 (following 8% growth in 2008)."

Cookson's electronics division reported an annual trading profit of UK£39.2 million, down 24% on the previous year, although its return on sales recovered from 2.6% in H1 to 11.2% in H2. Profitability was supported by "a more profitable revenue mix, with increased sales of higher margin innovative products such as halogen-free and lower melting point solder pastes" and cost reduction programmes. The division's headcount was reduced by 400 or 12% during the year, with most of the reduction in Europe. The transfer of European solder paste production from Ashford, UK to Hungary was completed at the end of the third quarter of 2009