Synthomer PLC Q3 Trading Update (0931R)
25 Ottobre 2019 - 08:00AM
UK Regulatory
TIDMSYNT
RNS Number : 0931R
Synthomer PLC
25 October 2019
October 25th 2019
Synthomer plc
Q3 Trading Update
Continued challenges in European SBR market; Revised FY
outlook
Synthomer plc ("Synthomer" or "the Group") today issues a
trading update for the third quarter ("Q3") ended September 30th
2019.
Trading
The growing weakness in the global economy has created a more
challenging backdrop for the Chemical industry. Depressed European
industrial activity combined with increased political and economic
uncertainties have resulted in an overall slower trading
environment throughout Q3.
Performance Elastomers
In this environment, Nitrile Butadiene Latex (NBR) had another
positive quarter with continued growth supported by the additional
90 ktes of capacity introduced during Q4 2018. NBR volumes
increased further during Q3 with year-to-date unit margins
remaining stable.
In SBR, the Group highlighted challenging conditions in Europe
at its H1 results in August. Conditions have not improved during Q3
and the Group's Paper segment has also continued to remain
particularly weak. Accordingly, management now expect SBR volumes
to be approximately 10% behind 2018 and unit margins to also be
similarly lower than last year. A review of network utilisation is
currently underway and an update on asset re-purposing and cost
base will be provided in conjunction with the Full Year results in
March 2020.
Functional Solutions
Notwithstanding the impact of tough market conditions, overall
performance was in line with the first nine months of 2018, with
lower volumes offset by higher unit margins. The Group expects to
see the benefits of additional capacity at Worms (Germany) and
Roebuck (USA) continue to come through in line with the investment
case.
Industrial Specialities
Industrial Specialities continued to trade in-line with
management expectations. Volumes and margins were broadly flat with
the first nine months of 2018.
Financial position
At 30 September 2019, the Group remained conservatively levered
with net debt/EBITDA, excluding the net proceeds of the rights
issue, of 1.4x (30 September 2018: 1.4x).
Proposed acquisition of Omnova Solutions Inc.
Following approval by both sets of shareholders and competition
clearance in the US, the transaction remains subject only to
regulatory approval from the European and Turkish competition
authorities, and the Group continues to target completion in late
2019.
There has been no material change to the expected de-leveraging
profile of the Enlarged Group as announced at the time of the
transaction.
Management remain confident of delivering a swift integration
and synergies during 2020.
2019 Outlook
Whilst Synthomer continues to benefit from its strong product
portfolio, end market diversification and geographic presence, the
slower trading environment is expected to continue through the
remainder of the year and into 2020, particularly in Europe.
Whilst Functional Solutions and Industrial Specialities are now
expected to be in-line with the prior year, with NBR ahead of 2018,
results for the Full Year will be adversely impacted by the
increased weakness in the European SBR business.
If the current weakness in macroeconomic conditions persist
through Q4, excluding any impact from the potential acquisition of
OMNOVA, the Board expects underlying profit before tax for FY 2019
to be approximately 10% below 2018 and accordingly current
consensus expectations*.
- Ends -
* Teneo compiled Company consensus: FY 2019 underlying profit
before tax - GBP135.3m
Enquiries:
Calum MacLean, Chief Executive Tel: + 44 1279 436211
Officer
Stephen Bennett, Chief Financial
Officer
Tim Hughes, Head of Investor
Relations
Charles Armitstead, Teneo Tel: + 44 7703 330 269
The Company will hold a conference call for investors and
analysts at 0800 BST today:
Dial in number: 08003589473 PIN: 25297905#
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END
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