REG - Synthomer PLC - Post-close trading update

SynthomerAnnouncement

18/07/2023 07:00

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RNS Number : 2923G  Synthomer PLC  18 July 2023

Synthomer plc

Post-close trading update

 

Synthomer plc ('Synthomer' or 'the Group') today announces an update regarding
trading for the six months ended 30 June 2023 (the 'period') and our outlook
for the remainder of 2023.

 

Group trading

Continuing Group revenue in the period was £1.1bn with EBITDA expected to be
in the range of £72-74m, broadly consistent with the Board's expectations
described in our 2022 results announcement in March. Continuing Group EBITDA
in the second quarter was higher than the first, notwithstanding the
challenging macroeconomic conditions throughout the period. Robust pricing and
our strong focus on margins helped to mitigate substantially lower volumes
compared with the first half of 2022, a consequence of destocking, subdued
levels of demand across most of our end markets and increased competition in
some of our base chemical product ranges.

 

We continued to focus on cash generation during the period, with reductions in
capital expenditure, working capital and costs across the Group. As at 30 June
2023, net debt was c.£795m, with net debt:EBITDA on a leverage covenant basis
of 5.5 times and committed liquidity of more than £400m.

 

Divisional update

All divisions continued to make progress against their key priorities,
including delivery of our refreshed strategy as announced last October. Those
parts of our portfolio identified as the more speciality, higher growth areas
in our strategy review proved the most resilient during the period and are
already beginning to benefit from our differentiated focus and investment.

 

Coatings & Construction Solutions (CCS) is achieving robust pricing and
margins, with improved trading performance over the period compared with the
last quarter of 2022 despite cautious customer buying behaviour. In line with
our strategy, CCS recently implemented several actions to broaden geographic
and customer penetration which will strengthen organic growth and increase
market share over time, while enhancing margins.

 

The performance of Adhesive Solutions (AS) in the period continues to reflect
the lower volume environment as well as the previously disclosed operational
reliability and supply chain challenges in the adhesive resins business,
acquired in early 2022. We expect our reliability and performance improvement
measures to have a positive impact in the second half of the year, despite
continued demand weakness. We also recently committed to expand our speciality
amorphous polyolefins capacity in North America to support growth in this
region.

 

In Heath & Protection and Performance Materials (HPPM), the challenging
medical glove market dynamics which followed the unprecedented activity during
the pandemic continue. In line with previous indications, we do not expect low
nitrile butadiene rubber (NBR) production levels to abate before the end of
2023. We continue to focus on capacity management and cost control.

 

Our non-core portfolio rationalisation programme continued to progress during
the period.

 

Update on outlook

The Board does not anticipate a material recovery in customer demand before
the end of the current year. However, we anticipate c.£20m in self-help
measures expected mainly in H2. Overall the Group remains confident of making
sequential progress in the second half relative to the first.

 

The Group continues to take decisive action to strengthen our business so that
it is positioned for profitable growth when demand does begin to recover. We
remain confident in our ability to execute our refreshed strategy and deliver
the medium-term targets set out last October, which were mid-single-digit
growth in constant currency over the cycle, EBITDA margins above 15% and
mid-teens return on invested capital.

 

Synthomer will report half year results for the six months to 30 June on 7
September 2023.

 

 

Further information:

Investors: Faisal Tabbah, Vice President Investor Relations      Tel: +44
(0) 1279 775 306

Media: Charles Armitstead, Teneo
               Tel: +44 (0) 7703 330 269

 

Notes

Legal Entity Identifier (LEI): 213800EHT3TI1KPQQJ56. Classification as per DTR
6 Annex 1R: 3.1.

 

Synthomer plc is a leading supplier of high-performance, specialty polymers
and ingredients for coatings, construction, adhesives, and healthcare end
markets. Headquartered in London, UK and listed there since 1971, we employ
around 4,400 employees across nearly 40 locations across Europe, USA and Asia.
With more than 6,000 customers and £2.4bn in continuing revenue in 2022, our
three divisions are aligned to our end markets which play an important role in
global megatrends including urbanisation, climate change, and economic and
demographic shifts. In Coatings & Construction Solutions, our tailored
solutions enhance the sustainability and performance of a range of products
such as architectural and masonry coatings, mortar modification, fibre
bonding, waterproofing and flooring, while our energy solutions promote
drilling stability in the challenging operating environments of the oil and
gas industry. Adhesive Solutions is a leading supplier of products that bond,
modify and compatibilise surfaces and components for a range of end markets
including tapes and labels, packaging, hygiene, tyres and plastics. In Health
& Protection and Performance Materials we are a world-leading supplier of
water-based polymers for medical gloves and a major European manufacturer of
high-performance binders, foams and other products for a range of niche
applications. Our purpose is creating innovative and sustainable solutions for
the benefit of customers and society. Around 20% of our sales volumes are from
new and patent protected products. At our innovation hubs in the UK, Germany,
Malaysia and Ohio, USA we collaborate closely with our customers to develop
new products tailored to their needs while also minimising environmental
impact. We are working to embed sustainability in everything we do; we have
reduced our scope 1 and 2 carbon footprint by one third since 2019, and our
2030 decarbonisation targets have been approved by the Science Based Targets
initiative as being in line with what the latest climate science says is
necessary to meet the goals of the Paris Agreement. Since 2021 we have held
the London Stock Exchange Green Economy Mark, which recognises green
technology businesses making a significant contribution to a more sustainable,
low-carbon economy. Find us at www.synthomer.com (http://www.synthomer.com) ,
@Synthomer_Group on Twitter or search for Synthomer on LinkedIn.

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