Synthomer warns of lower operating profit off weak demand

2nd Jul 2015 07:01

Chemicals company Synthomer said it expected a lower operating profit from its Europe and North American division in the second quarter due to weak demand and increased prices for raw materials. The company said in an update that volumes would fall due to weaker demand in the firm's paper and carpets business.Synthomer said in the US and Europe, raw material price inflation had returned, which meant the company did not benefit as it had in the first quarter of the year.Overall, it said, operating profit was "marginally" behind the prior period in local currency, and further behind on a reported basis due to the weak euro and consequently "slightly behind current market expectations".The company is due to pay out a dividend of 4.8p per share and a special dividend of 7.8p per share on 3 July 2015, which would result in a total cash payment to shareholders of about £43m.Looking ahead, Synthomer's board said currency moves in Europe would have further impact this year, but remained confident of a strong performance in Asia, which this quarter had been ahead of current expectations.