1st May 2014 08:42
LONDON (Alliance News) - Synthomer PLC Thursday reiterated confidence in its medium- and long-term outlook and said it was continuing to review its dividend policy to potentially increase returns to shareholders.
Synthomer produces aqueous polymers.
The company had previously said it intended to move its dividend cover to three times by 2015, but noted that due its strong underlying cash flow and low leverage, it was reviewing the policy "with a view to increasing the planned level of returns to shareholders."
Synthomer said that the firmer demand in Europe for its Construction & Coatings, Functional Polymers, and Performance Polymers segments towards the end of 2013 had continued into the first quarter to end-March.
As a result, it saw an operating profit in its Europe and North America business ahead of the previous year, despite taking a currency hit of GBP600,000. Although the trends in Europe were encouraging, the company said it would remain cautious until the trends were "more sustained."
In Asia and the Rest of the World substantial expansion from nitrile customers led to excess glove capacity, and aggressive competition, Synthomer said. This, alongside drops in the price of butadine, resulted in destocking and pressure on nitrile margins.
As a result, it said that results from this region would be slightly weaker than its expectations at the start of the year, but noted that the fundamental drivers of the business remained strong.
Synthomer expects on-going demand for nitrile latex and margins to firm up as the year progresses.
It is currently planning to further expand its nitrile latex capacity, and said it intends to announce these plans in the next few months.
Shares in Synthomer were trading up 0.3% at 264.90 pence.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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