REG - Synthomer PLC - Trading Statement

SynthomerAnnouncement

30/01/2024 07:15

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RNS Number : 2876B  Synthomer PLC  30 January 2024

 

Synthomer plc

Winter trading statement

 

Synthomer plc ('Synthomer' or 'the Group') today issues a scheduled update on
trading for the twelve months to 31 December 2023.

 

We expect to report revenue of £2.0bn and underlying EBITDA in the range of
£140-144m for the continuing Group in 2023. Year-end net debt is expected to
be £499m, ahead of our expectations as a result of strong cash delivery in
the final quarter. Since the start of 2023 we have reduced net debt by half,
through the rights issue, divestment programme and our strong focus on cash
conversion.

 

Trading in the fourth quarter was consistent with trends throughout 2023, with
subdued volumes and limited visibility reflecting ongoing challenging macro
conditions throughout the chemicals industry. Our more differentiated
speciality businesses continue to be significantly more resilient in terms of
volumes and pricing compared to our base businesses, which reinforces our
determination to deliver the strategic refocusing of the Group set out in
October 2022. Coatings and Construction Solutions (CCS), our most
speciality-weighted division, delivered a resilient final quarter, its fourth
of the year. Adhesive Solutions (AS) experienced increased pricing pressure
from global competitors in its base products towards the end of the year
although its speciality businesses remained more robust, and we continue to
work through the reliability and supply chain challenges described previously.
In Health & Protection and Performance Materials (HPPM), our nitrile
butadiene business experienced a modest improvement in volumes in the fourth
quarter.

 

The Group has the operating capacity to deliver significant progress in
volume, revenue, EBITDA and cash generation as end market demand recovers,
although visibility as to the timing of this remains limited at present.
Therefore, for prudence, we are progressing a dialogue with our lending banks
to extend the period of temporary covenant relaxation to ensure that we
maintain appropriate headroom while trading conditions remain subdued.

 

In 2024, the Group will continue to focus on delivering our speciality
solutions strategy, including portfolio management, alongside our ongoing
activities to generate robust cash flow and successfully navigate through
current uncertainties in our markets. In addition to further progress with our
previously announced actions to reduce cost, complexity and improve site
reliability, we have commenced a procurement optimisation programme which is
expected to deliver significant additional savings in 2024 and 2025. These
actions will be partially offset by some increases in operating overheads,
mainly due to wage inflation and normalisation of bonus accrual. We remain
confident that Synthomer's medium-term earnings power is more than double
recent levels, through a combination of our near-term actions, end market
volume recovery and strategic delivery.

 

Commenting, Synthomer CEO Michael Willome said:

"We continue to execute our speciality solutions strategy, repositioning the
Group to deliver on its substantial potential for value creation as market
conditions begin to improve. In the near term, our focus remains on enhancing
our strong positions in key speciality end-markets, optimising our business
portfolio and cost position, and sustaining our demonstrated ability to
generate free cash flow despite the challenging demand environment."

 

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 speciality 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) or
search for Synthomer on LinkedIn.

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