Troubled steel markets harm Cookson profit

COOKSON Group plunged 12.36 per cent yesterday as it issued a profit warning.

In an interim management statement, the FTSE 250-listed materials group warned that a weak performance in its engineered ceramics division, which makes products for the global steel industry, would cause it to miss its forecasts for the year.

It cited weak steel production volumes, which declined by three per cent over the first half of the year according to the World Steel Association, for the profit warning. Notably, production from the Eurozone was 11 per cent lower year on year.

Over half of Cookson’s profits are derived from the engineered ceramics division.

Cookson has been considering splitting its ceramics and performance materials units since the spring in an effort to improve shareholder returns.

It said yesterday that a business review, including the potential demerger, was progressing well and it expected to update shareholders before the end of the year.

The loss from the engineering ceramics business overshadowed trading in the performance materials and precious metals processing divisions, which Cookson said yesterday remained in line with expectations.

The industrial materials group warned that the global economic environment remained “uncertain and difficult to predict”.

Broker N+1 Singer downgraded the FTSE 250 firm from “buy” to “hold” on the back of the profit warning.