11th Aug 2014 07:28
LONDON (Alliance News) - Synthomer PLC saw its shares rise Monday after it raised its interim dividend by 25%, despite reporting a fall in both sales and profit in the first half of its financial year, hit by weakness in Asia.
The speciality chemical company reported a pretax profit of GBP45.0 million for the six months to June 30, compared with GBP48.6 million a year earlier, as revenue in the period fell to GBP510.1 million, down from GBP558.3 million in the first half of last year. It said revenue and profit were hit by significant weakness in the Asia and Rest of World region.
"Despite good progress on volumes, performance continued to be impacted by the competitive environment among glove manufacturers which depressed margins in the nitrile business," the company said in a statement.
The company had warned last month that it was now expecting a full-year 2014 pretax profit broadly in line with 2013, as strong competition in Asia and the strengthening of sterling continues to hamper its performance. It said strong competition between glove manufacturers had continued in its Asia and Rest of the World segment, which has caused margin pressure in its Nitrile business, further exacerbated by weak pricing of Butadiene and customer de-stocking. However, the group said it expects nitrile unit margins to firm in the second half.
Despite the fall in both profit and revenue, Synthomer raised its interim dividend by 25% to 3.0 pence.
"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," said Chief Executive Adrian Whitfield in a statement.
Synthomer shares rose 4.7% in early trading Monday, to 218.24 pence, the biggest gainer on the FTSE 250.
While revenue fell in the first-half, volumes were up 1.8%.
The FTSE 250-listed company is faring better in Europe and North America, where trading continued in line with expectations as volumes were ahead of the previous year in construction and coatings, functional polymers, and performance polymers.
"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," Whitfield reaffirmed in the company's statement Monday.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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