7th Nov 2013 09:54
LONDON (Alliance News) - Synthomer PLC, the maker of resins and binders for construction and manufacturing, Thursday reiterated that operating profit in the second half of its financial year will be down on the first half, as it continues to experience weakness in Europe.
The company, which in August reported an 11.4% decline in operating profit to GBP56 million, said it had seen no improvement in conditions in Europe since that time, with a slight rise in volumes offset by continued weak margins. It said it had taken "a number of pricing actions", but didn't give any detail.
It wasn't all bad news. Its operations in Asia and the rest of the world continued to trade strongly, driven by demand for nitrile products after the company launched new products, and it expects profits from these businesses to be in line with the first half and significantly up on last year.
Synthomer also said it had cut debt slightly since it reported its interim results, a situation it expects to improve further as it tends to use less working capital in the business towards the end of the year for seasonal reasons.
"Whilst challenging market conditions in Europe have persisted, our business has held up well and strong cash generation is enabling us to maintain investment in emerging market growth," Chief Executive Adrian Whitfield said in a statement. "The nitrile business in Asia has continued its solid performance and we are encouraged by the demand growth in the region."
Nitriles are used in making products like medical, food handling and examination gloves.
Back in August, the company reported a 14.6% decline in earnings before interest and tax for the first half of the year in Europe and North America, while Asia and the rest of the world grew 4.5%. It had warned at that time that it expected profits in Europe would be "somewhat lower" in the second half compared with the first half unless there was a pickup in the markets.
Synthomer shares were down 1.3% at 229.70 pence Thursday morning, one of the biggest declines on the FTSE 250.
By Steve McGrath; [email protected]; @stevemcgrath1
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