Synthomer ups divi as Asia challenges persist

11th Aug 2014 09:10

Chemicals group Synthomer cheered investors with a 25% jump in the interim dividend, which came despite a drop in half-year sales amid challenging market conditions. The company also said it anticipated delivering underlying full-year profit in line with last year's figure of £90.1m. Chief executive officer Adrian Whitfield said: "Against challenging market conditions, particularly in our Asian nitrile business, Synthomer has delivered a solid performance in the first half of 2014, with group volumes up 1.8%. "Given the strong cash generative nature of our business, the board has today updated the group's dividend policy, increasing the level of cash returns for shareholders." The group described its half-year performance as "solid", pointing to a 1.8% rise in group volumes and a strong performance in Europe, which helped to partially offset weakness in its Asian nitrile business. Turnover for the period declined from £558.3m to £510.1m year-on-year, with Asia and Rest of World declining from £8.3m to £4.5m and Europe and North American slipping £0.4m to £36m. The portion of sales termed "unallocated" was flat at a loss of £4m. Finance costs decreased 15% from £7.8m to £6.6m, resulting in pre-tax profit of £29.9m, down 9%. Underlying earnings per share fell 7.3% from 10.9p to 10.1p. The performance of the group in Asia continued to be affected by competition among glove manufacturers, which depressed margins in the nitrile business, which offset the 4.9% increase in margins. Nitrile unit margins are expected to firm in the second half, together with continued growth in nitrile demand, it said. Synthomer's performance in Europe was more encouraging, with demand levels rising. However, currency translation affected operating profit, which was up 1.9% on a constant currency basis. Total volumes in both Europe and North America were 0.4% higher. An interim dividend of 3p was announced, up 25% on the same period a year earlier. Looking ahead, the group said: "We expect the improved demand in Europe to continue through the remainder of the year. In Asia, we expect continued growth in nitrile demand, and some firming in nitrile cash margins."Together with the impact of currency, we expect full-year underlying profit before tax to be broadly in line with the level achieved in 2013." Shares had risen 4.39% to 217.04p by 08:40. NR