Third Quarter Trading Update

Cookson Group PLC
05 November 2004

5 November 2004



COOKSON GROUP PLC - THIRD QUARTER TRADING UPDATE



Highlights



•   Sales for continuing operations up 17%
•   Operating profit* up 93%
•   Group profit before tax* improves significantly on last year
    -   Q3: £22m vs. £5m
    -   year-to-date: £64m vs. £10m
•   Strong sales and profit* growth in Electronics and Ceramics divisions

•   Borrowings £17m lower than last year



*(before amortisation of intangible assets and exceptional items)



Commenting on the third quarter, Nick Salmon, Cookson's Chief Executive, said:



'Cookson achieved a satisfactory performance in the third quarter which was in
line with our overall expectations.  The Electronics and Ceramics divisions both
registered sales and profits well ahead of last year, although the Precious
Metals division faced a difficult quarter.  The electronics industry recovery,
which began at the end of the third quarter last year, is expected to continue
in the fourth quarter albeit at a lower year-on-year rate of growth.  Steel
production in the Group's major markets is envisaged to be maintained at current
levels.  Traditionally, the fourth quarter is the most active for jewellery
retail sales.   We therefore anticipate a continuation of generally favourable
trading conditions for the remainder of 2004.  As a result, profit before tax
for the year is expected to be in line with current market expectations.'



Details of divisional and Group results are provided below.



Electronics



Sales of £169 million for the third quarter of 2004 were 31% higher than the
same quarter last year at constant exchange rates and up 20% at reported rates.
Activity in Asia-Pacific continued to grow strongly; in the USA the gradual
improvement which has been underway since the fourth quarter of 2003 was
maintained; whereas in Europe no significant change in year-on-year demand has
been seen.  As a result of increased activity levels and an essentially
unchanged overhead cost structure, operating profit of £13 million for the third
quarter of 2004 was £10 million higher than the same period last year, at both
constant and reported exchange rates.



Assembly Materials

Third quarter sales of £73 million were 37% ahead of last year at constant
exchange rates.  Approximately two-thirds of the increase was due to the passing
on to customers of higher tin prices - the sector's key raw material - which
have risen year-on-year by 90%.  The balance of the increase was largely due to
higher volumes in the sector's surface mount and speciality coatings products.
Despite the sharp increase in the cost of tin, third quarter profits for the
Assembly Materials sector increased by some 45% over the same period last year.



Chemistry

Sales of £62 million for the third quarter were 20% higher than last year at
constant exchange rates.  Growth was achieved by both the sector's electronics
and non-electronics product applications, with a particularly strong performance
by the copper damascene product range used by the semiconductor industry.  As a
consequence of increased activity levels and unchanged overhead costs, profits
improved markedly, doubling year-on-year.



Laminates

Third quarter sales of £33 million were 40% higher than the same quarter last
year at constant exchange rates.  The strong increase in sales was due to
significantly higher year-on-year levels of industry demand for laminate
products, boosted by the introduction of new products and increased market
share. Market share gains were achieved and higher average prices obtained which
offset increases in raw material such as fibreglass cloth and copper foil.  The
Asia-Pacific operations continued to record high levels of profits whilst Europe
remained at break-even and the USA continued to operate at a loss. As a
consequence, whereas the sector incurred a loss of £4 million in the third
quarter last year, this year it recorded a modest profit.  Although the
performance of the Laminates sector has improved considerably since the third
quarter of last year, management continues to focus on improving the
profitability of both the US and European operations.  The programme embarked
upon earlier this year to rationalise capacity and the cost structure in these
two regions is ongoing and, in this regard, further overhead headcount
reductions were recently initiated in the USA.



In October, Steve Corbett was appointed Chief Executive of the Electronics
division; prior to this he was responsible for the division's Chemistry sector.
The Chemistry and Assembly Materials sectors will now both report to Steve.   As
an interim measure, the Laminates sector, now headed by Rick Richesin, will
continue to report directly to Cookson Group's Chief Executive Nick Salmon until
the turnaround programme referred to above is substantially completed.



Ceramics



The Ceramics division's sales of £186 million in the third quarter were 17%
higher than the same quarter last year at constant exchange rates and up 9% at
reported exchange rates.  In the third quarter, steel production rose by 11% and
8% respectively in the division's main markets of NAFTA and the EU.  In China -
the world's largest steel producing country - output grew by 22% and was also up
strongly in other emerging markets such as South America and Eastern Europe,
where the division has a strong presence.  Consequently, the Iron and Steel
sector, which accounts for approximately two-thirds of the division's turnover,
recorded a year-on-year increase in sales of 18% in the third quarter.   In
addition, sales were boosted by a number of large relining projects.  Trading
conditions in the Foundry, Industrial Processes and Glass sectors were also
positive and sales for these businesses collectively rose by 15%.



The increase in sales resulted in the division's operating profit rising to £15
million in the third quarter, 44% higher at constant exchange rates than the
same period last year and up 30% at reported exchange rates.



Precious Metals



In the Precious Metals division, sales of £64 million were down 8% on the same
quarter last year at constant exchange rates and were 15% lower at reported
exchange rates.  This was mainly due to: the closure of five locations in France
as a result of the rationalisation programme introduced earlier this year;
weakness in the UK and in certain speciality products in the USA; and a higher
mix of lower margin silver products produced by the US mill and fabrication
activities.   Despite meaningful savings in overheads at the European and US
operations arising from programmes initiated both this year and last year, lower
sales activity and the unfavourable product mix in the USA resulted in operating
profit for the third quarter of £1 million being £1 million lower than last
year.



Group



Sales for continuing operations for the third quarter of £419 million were 17%
higher than the same quarter last year.  Operating profit before exceptional
items and amortisation of intangibles was 93% higher than the prior year at £29
million.



Profit before tax and before exceptional items and amortisation of intangibles
for the Group in the third quarter of 2004 was £22 million and was £64 million
for the nine months ended 30 September 2004.  This compares with profit before
tax for the same periods of 2003 of £5 million and £10 million respectively,
with the year-on-year improvement comprising the following.


                                                                       Q3  Y-T-D
                                                                       £m     £m
•     Increase in operating profit of continuing operations
      -  at constant exchange rates, as set out above                  14     39
      -  exchange rate translation effect                             (2)    (4)
•     Eradication of losses incurred by businesses sold in 2003, 
      mainly Speedline                                                  5     15
•     Decrease in interest, due mainly to lower effective rates         -      4
Net increase in profit before tax*                                     17     54

*(before amortisation of intangible assets and exceptional items)



Operating exceptional items of £1 million arose in the third quarter for
rationalisation projects embarked upon earlier in the year.  This results in a
year-to-date total of £12 million, the majority of which relates to the
restructuring of the Precious Metals operations in France which commenced in the
first half.  No non-operating exceptional items arose in the third quarter.



Headline earnings per share, i.e. before exceptional items and amortisation of
intangibles, was 0.8p in the third quarter (2003: 0.1p) and 2.2p for the
year-to-date (2003: 0.3p).  Earnings per share after all exceptional items and
amortisation of intangibles was 0.3p for the third quarter (2003: 0.8p loss) and
a loss per share of 0.1p for the year-to-date (2003: 1.7p loss).  This assumes
an effective tax rate of 30% which is unchanged from last year.



Free cash outflow in the third quarter amounted to £8 million, which compares
favourably with an outflow for the same period last year of £51 million.
Traditionally, working capital is built during the third quarter for the
seasonally stronger September to November trading period and, whilst working
capital did increase during the third quarter of 2004, the ratio of working
capital to sales for the nine months ended September 2004 was lower than that of
the previous year.



As a result of the £8 million of free cash outflow, £8 million of deferred
consideration for the acquisition of Achem and a £5 million negative exchange
rate translation impact, borrowings increased by £21 million in the third
quarter to £407 million (2003: £424 million)



The £80 million of convertible bonds that matured on 2 November 2004 were repaid
using existing bank facilities.



Outlook



The electronics industry recovery, which began at the end of the third quarter
last year, is expected to continue in the fourth quarter albeit at a lower
year-on-year rate of growth.  Steel production in the Group's major markets is
envisaged to be maintained at current levels.  Traditionally, the fourth quarter
is the most active for jewellery retail sales.  A continuation of generally
favourable trading conditions is therefore anticipated for the remainder of
2004.  As a result, profit before tax for the year is expected to be in line
with current market expectations.





Cookson will issue a fourth quarter trading update on Tuesday 18 January at
which time Nick Salmon will present his views on the future direction of the
Company.





A conference call for shareholders and analysts will be held today at 10:00am UK
time.  This can be accessed via a live audio webcast at www.cooksongroup.co.uk.




Shareholder/analyst enquiries:
Nick Salmon, Chief Executive                           020 7061 6500
Dennis Millard, Group Finance Director                 020 7061 6500
Lisa Williams, IR Manager                              020 7061 6500

Media enquiries:
John Olsen, Hogarth Partnership                        020 7357 9477



Notes:

(1)         All financial information is preliminary and unaudited.

(2)         Operating profit and profit before tax are stated before all
exceptional items and amortisation of intangible assets, unless stated
otherwise.

(3)         This announcement contains forward looking statements about Cookson.
Although the Company believes its expectations are based on reasonable
assumptions, any such statements may be influenced by factors that could cause
actual outcomes and results to be materially different from those predicted.
These forward looking statements are subject to numerous risks and uncertainties
that could cause actual results to differ materially from those in such
statements, certain of which are beyond the control of Cookson.



About Cookson Group

Cookson Group is a leading materials technology company which provides
materials, processes and services to customers worldwide. The Group's operations
are formed into three divisions - Electronics, Ceramics and Precious Metals. The
Electronics division is a leading manufacturer and supplier of materials and
services to the electronics industry, primarily serving fabricators and
assemblers of printed circuit boards, assemblers of semiconductor packaging and
the electrical and industrial markets. The Ceramics division is the world leader
in the supply of advanced flow control and refractory products and systems to
the iron and steel industry and is also a leading supplier of refractory lining
materials for iron and steelmaking and other industrial processes. The Precious
Metals division is a leading supplier to the jewellery industry of fabricated
precious metals products.



Headquartered in London, Cookson employs over 15,600 people in more than 35
countries and sells its products in over 100 countries.




Cookson Group plc, 265 Strand, London WC2R 1DB
Tel:  [phone], Fax: [phone]


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