Interim Management Statement

RNS Number : 4095V

Synthomer PLC

28 October 2014

 



28th October 2014                                                               

Synthomer plc

Interim Management Statement

Synthomer plc ("Synthomer" or "the Group") today issues its Interim Management Statement for the period 1 July to 28 October 2014.

Trading

At our interim results on August 11^th 2014, we reported firmer demand in our European and North America (ENA) segment, particularly in construction. Unfortunately this improved demand trend has not persisted through the third quarter and volumes, excluding business that we deliberately exited in compounds as reported in half one, were down 3% in ENA.  Despite this, unit cash margins continued to firm as a result of our active margin management strategy, and year-to-date average margins in ENA are now ahead of the 2013 average. However, on a local currency basis, as at the end of the third quarter, year-to-date operating profit was slightly down on the prior year.

In our Asia and Rest of the World (ARW) segment, volumes increased by 1.3% in the quarter. Volumes have been impacted somewhat by our market activities to improve unit cash margins in the nitrile business, where we have made good progress. We remain positive about continuing demand growth in the nitrile latex market.

Financial Position

The balance sheet remains in a strong position with the net debt / EBITDA ratio at approximately 1x.

We completed the purchase of the other 50% of our EKA Synthomer JV in Finland in October from Akzo Nobel for €5 million. The entity has some €6 million of debt at the transaction date which will be consolidated at the year end, meaning year end net debt for the Group will be slightly higher than previous expectations, and is likely to be similar to the mid-year position.

Consistent with our capital management policy articulated at the interim results, if excess capital has not been deployed for either bolt-on acquisitions or capital expenditure, at the year end the Board will consider a one-off capital return to shareholders to maintain an efficient balance sheet.

Outlook

At current run rates and given the current demand environment in Europe, the Board now expects full year profit-before-tax to be slightly below current consensus¹.  We are cautious about performance in Europe given recent economic developments, and should this impact demand further than currently anticipated in the fourth quarter, then profit-before-tax is likely to be around the lower end of the current consensus range².

1.     Company compiled 2014 consensus PBT: £87.8 million

2.     Company compiled 2014 consensus PBT range: £81.3million - £90.3 million

Enquiries:

Adrian Whitfield, Chief Executive Officer	Charles Armitstead / Rebecca Hall
David Blackwood, Chief Financial Officer	Pendomer Communications
Tel: [phone]	Tel: [phone]

The company will host a conference call for analysts at 8.30am today. Please contact Pendomer Communications on 020 3603 5220 for dial in details.

 

END

 

 

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