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(Alliance News) - Synthomer PLC on Monday said its annual performance was hurt by "deteriorating macroeconomic conditions" and destocking of medical gloves following the Covid-19 pandemic, despite improved revenue.
The Essex, England-based chemicals maker swung to a pretax loss of GBP47.6 million in 2022 from a profit of GBP283.9 million in 2021.
This was attributed to unprecedented demand for nitrile latex in 2020 and 2021 to make medical gloves. This was followed by prolonged destocking of medical gloves in 2022, resulting in weaker demand, Synthomer explained.
The company said Covid-related disruptions, the war in Ukraine, and recessionary pressures also hurt its financial performance in 2022.
Nevertheless, revenue rose by 11% to GBP2.38 billion in 2022 from GBP2.14 billion the year before. Despite lower volumes, revenue was lifted by "increasing inflationary pressures" driving up the prices that Synthomer charges.
The company said it has decided to suspend dividend payments until the end of 2023, in order to reduce debt. Synthomer paid a 21.3 pence per share dividend for 2021, up from 8.6p for 2020. At the time, it called this an "exceptional increase reflecting the unique year of profitability".
Looking ahead on Tuesday, Synthomer said it expects to make progress in the second half of 2023 as market conditions are expected to improve. However, the company said "visibility of this is currently limited".
Synthomer does not expect the unprecedented period of destocking, and hence low nitrile butadiene rubber production levels, to subside before the end of 2023, it said.
Michael Willome Chief Executive Officer said: "Following an exceptional prior year and a robust first half, our overall performance in 2022 was significantly affected by deteriorating macroeconomic conditions during the second half and the prolonged destocking in nitrile latex."
Synthomer cut costs in response, Willome said, and is on track to save GBP150 million to GBP200 million in cash by the end of this year. The company also sold non-core businesses to raise money and completed a refinancing of its debt.
As a result, the CEO said, "we are well-positioned to make progress toward our medium term profitable growth targets."
Synthomer shares were down 11% to 109.99 pence on Tuesday morning in London.
By Sabrina Penty; Alliance News reporter
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