SYNT Synthomer Plc

TIDMSYNT

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 GBP1.1bn with EBITDA expected to be in the range of GBP72-74m, 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.GBP795m, with net debt:EBITDA on a leverage covenant basis of 5.5 times and committed liquidity of more than GBP400m.

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.GBP20m 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 GBP2.4bn 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 , @Synthomer_Group on Twitter or search for Synthomer on LinkedIn.

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