Synthomer profits slump 10 per cent on weak European performance

13th Aug 2013 07:28

Synthomer, which develops and markets polymers used in everyday consumer products, suffered a 10 per cent decline in underlying pre-tax profit following continued weak demand in European markets, which offset growth in Asia and the Rest of the World (RoW). Pre-tax profits for the six months to June 30th totalled £48.6m (2012 H1: £54.2m) on sales of £558.3m (2012 H1: £603.3m). The company, which was previously known as Yule Catto, said the performance was in-line with expectations, and continued with its progressive dividend policy, increasing the interim pay-out by 0.2p to 2.4p. Earnings per share for the period declined 7.6% from 11.8p to 10.9p. Adrian Whitfield, Chief Executive Officer, said: "Synthomer has delivered a solid performance in the first half of 2013, in line with expectations. Business in Europe has remained challenging, with a continuation of the weak demand trends seen in the second half of 2012 reflecting the current economic environment. "In Asia, the performance of our nitrile business has been encouraging, with the pace of recovery being faster than originally anticipated. We have seen good demand growth and a modest improvement in margins from the low levels we saw over most of last year. "For the balance of the year, absent any recovery in demand in Europe, the board expects that our European business profitability will be somewhat lower than the first half, largely reflecting the impact of normal seasonal factors. The Asia and RoW business is expected to operate at a similar level to the first half."Net debt was reduced to £151.7m from £174.2m at the same date the prior year. Regionally, operating profit fell 14.6% in Europe and North America, but climbed 4.5% in Asia and RoW, while jumping 13% in what the company labelled "unallocated". Overall, operating profit slumped 11.4%. The company was keen to stress that although the lower results were "disappointing", its acquisition of PolymerLatex has provided it with "a strong platform in terms of cash generation" and "created a much more robust European business"."This has allowed us to remain focused on our long-term growth strategy of using strong European cash flows to invest in new products and accelerate our growth in emerging markets," the company said. Looking ahead to the second half, the board said it expects its European business profitability will be "somewhat lower than the first half, largely reflecting the impact of normal seasonal factors". It added that the Asia and RoW business is expected to operate at a similar level to the first half. NR