Synthomer PLC shares tumbled as its half-year was hit by soft demand for nitrile gloves, after a record performance the year before, said the company.
The Essex-based chemicals maker said pretax profit in the first half dropped 55% to GBP115.5 million from GBP254.4 million a year before. Shares in Synthomer were 11% lower at 209.64 pence each in London on Tuesday morning. This was despite growth in revenue, which was 8.5% higher at GBP1.22 billion compared to GBP1.23 billion.
The decline in profit was mostly due to the outperformance in the firm's Performance Elastomers division in the year before. "Around the world, the exceptional demand for [nitrile butadiene rubber] gloves during the Covid-19 pandemic resulted in a record performance last year. Current destocking has meant that demand has softened substantially, resulting in lower nitrile volumes, revenues and [earnings before interest, tax, depreciation and amortisation]," the company explained.
NBR is frequently used in latex and surgical gloves. Operating profit dropped 87% to GBP27.8 million for the PE division. Profit growth was seen across all other divisions compared to 2021, however. Ebitda of GBP173.1 million trailed behind GBP322.7 million the year before, but compared favourably with GBP100.2 million and GBP99.7 million in 2020 and 2019 respectively, the firm noted. Synthomer proposed an interim dividend of 4.0p, down year-on-year from 8.7p.
As per MRC, Eastman has completed the previously announced sale of its adhesives resins business to UK-based Synthomer for USD1bn in cash. The sale included the hydrocarbon resins (including Eastman Impera tyre resins), pure monomer resins, polyolefin polymers, rosins and dispersions, and oleochemical and fatty-acid based resins product lines. All of these businesses were previously part of Eastman's Additives & Functional Products segment.
mrchub.com