Synthomer Regulatory News (SYNT)

2nd July 2015

Synthomer plc

Trading Update

Synthomer plc ('Synthomer' or 'the Group') today issues a Trading Update ahead of its Interim Results on Tuesday 11 August 2015.

Overall, the Board's expectations for the full year remain unchanged.

Europe and North America

In our Q1 trading update, we reported that volumes were slightly behind the same period in 2014. We continued to see a similar trend in Q2, with volumes lower than the prior period primarily due to weaker demand in our Paper and Carpets businesses. As expected, the small margin benefit we experienced in Q1 from declining raw material prices did not continue in Q2, as modest raw material price inflation returned. Overall, operating profit in our Europe and North America segment is marginally behind the prior period in local currency, further behind on a reported basis (H1 2014: £47.8m) due to the weak Euro and consequently slightly behind current market expectations.

Asia and Rest of World

Our Asia and Rest of World segment has continued to experience both improved unit margins and strong demand similar to that seen in the first quarter, particularly in our Asian nitrile business. We have seen good volume growth and substantial margin growth, relative to the weaker performance in the first half of 2014. As a result, operating profit in our Asia and Rest of World segment for the first half of 2015 is materially ahead of the prior period (H1 2014: £7.3m) and current market expectations.

Financial Position

The Group continues to generate strong cash flows from all its operations and this, together with the benefit of the translation of the Euro denominated debt, will result in a further significant reduction in net debt at the end of the first six months. 

The Final 2014 Ordinary Dividend of 4.8p per share and the Special Dividend of 7.8p per share will be paid on 3 July 2015 resulting in a total cash payment to shareholders of approximately £43m.

Outlook

Looking forward to the second half, the economic and currency challenges in Europe are expected to have a continued impact on performance. This will be offset by Asia and Rest of World where, despite some softening in market conditions at the end of the first half, we remain confident of a continued strong performance. Overall, the Board's expectations for the full year remain unchanged.