Synthomer shares sink as unstable demand limits revenue, widens loss

(Alliance News) - Synthomer PLC on Tuesday reported a business slowdown, as its interim loss widened in what the industrial firm described as "subdued markets".

The London-based developer of polymer chemicals posted a pretax loss of GBP36.9 million for the six months that ended June 30, widening from GBP33.2 million the year prior.

Revenue fell 9.8% to GBP925.2 million from GBP1.03 billion, which Synthomer attributed to volatile market demand and a subsequent 7.1% drop in production volumes compared to the previous year. Though the firm said its direct new tariff exposure remains "limited", earnings have been hit by surcharges and currency fluctuations.

Synthomer shares were down 18% at 64.70 pence on Tuesday morning in London and have fallen nearly 74% over the past 12 months.

For the group as a whole, earnings before interest, tax, depreciation and amortisation were 4.1% higher at GBP77.8 million, compared to GBP74.7 million in the first half of 2024.

By division, Coatings & Construction Solutions was the weakest, as Ebitda fell 35%. The branch contributed GBP372.5 million in revenue, 14% below the previous year's GBP430.4 million contribution.

Performance was more encouraging in other branches, with Adhesive Solutions growing Ebitda by 62%, while Health & Protection & Performance Materials posted 23% higher Ebitda. Both branches reported lower revenue on-year.

The Corporate branch remained in decline, but narrowed its Ebitda loss to GBP8.7 million from GBP13.7 million.

Synthomer's basic loss per share widened to 25.5 pence from 18.8 pence in the first half.

Chief Executive Michael Willome reiterated his company's stability amid volatility: "We have delivered gross margin improvement and Ebitda growth in the period despite the challenging environment in our markets. Our 'in region for region' manufacturing strategy positions us well to weather a more protectionist trade environment while continuing to serve our customers.

"Given demand in our end markets has become more uncertain, we have stepped up our focus on what we can control - launching an additional cost reduction programme, taking further steps in the transformation of the portfolio and allocating resources even more rigorously to prioritise derisking the balance sheet."

Synthomer's net debt increased to GBP638.3 million at June 30 from GBP560.6 million on-year, the result of "typical seasonal" cash flow patterns, according to the firm.

For the full year, Synthomer anticipates "some earnings progress and broadly neutral free cash flow". The company is expecting a GBP9 million gain in the second half from a recently-implemented cost cutting scheme, which aims to "mitigate more subdued end-market demand" as trade tensions persist.

By Holly Munks, Alliance News reporter

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