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(Sharecast News) - Polymers group Synthomer missed its own revenue targets for 2023 after a downturn in many of its end markets, but said that trading since the year-end has been "cautiously encouraging", causing shares to surge on Tuesday morning.
The company, which provides polymers and ingredients for the coatings, construction, adhesives, and healthcare end markets, said revenues fell 15.5% to £1.97m, slightly under its own guidance of £2.0bn given in January.
Synthomer blamed a challenging market environment, "with prolonged demand weakness exacerbated by destocking", with a 9.9% reduction in volume and pass through of lower raw material input prices.
Underlying operating profits sunk 77.8% to £37.7m, with the EBITDA margin dropping to 7.2% from 10.9%.
"Despite a challenging year, we have taken decisive actions to position the business well for the future," said chief executive Michael Willome.
The company said it was focusing on increase focus, reducing cost and complexity, cutting its site footprint to 36 from 43, sorting supply chain and reliability issues within the Adhesive Solutions division and achieving £18m of cost savings overall. As a result, EBITDA margins across all divisions improved in the second half compared with the first.
Looking ahead, the company said trading since the start of 2024 has been "cautiously encouraging, supported by short-term restocking by customers, though evidence of broad-based demand recovery remains limited". Meanwhile, cost reduction actions will be partially offset by wage inflation and the normalisation of bonus accrual.
The stock was up 10% at 157.9p in early deals on Tuesday.
