Q3 Trading update

RNS Number : 6789O

Synthomer PLC

09 November 2016

 

November 9^th 2016                                                                                                                                         

Synthomer plc

Q3 Trading update

Positive performance and Full Year 2016 guidance maintained

Synthomer plc ('Synthomer' or 'the Group') today issues a trading update for the third quarter ('Q3') ended September 30^th, 2016.

Trading

Europe and North America

Europe and North America has continued to trade well, in line with our expectations and consistent with the positive trends experienced through H1 2016. Q3 reported volumes were in line with last year whilst reported unit margins for the quarter were ahead of Q3 2015 and Q2 2016. Accordingly, with the exception of Paper latex, gross margins across all businesses were stronger than last year. This performance reflects the improved trading environment as well as the Group's focus on efficiency, new product initiatives, strengthened procurement function and investment in business development activities.

Asia and Rest of World

Asia and Rest of World has continued to trade in line with our expectations, with the competitive dynamics in our Asian Nitrile business evolving broadly as expected following the introduction of additional industry capacity.

Reported Asian volumes were marginally lower than last year but sequentially higher than Q2 2016, largely driven by increased volumes in the Asian Nitrile business. As expected, the market environment has led to overall unit margins softening from the highs seen in H2 2015 and H1 2016. Whilst the competitive dynamics in our Asian Nitrile business are continuing to evolve, this downward price pressure has not been as marked as the Group experienced in previous years. We continue to expect full year volumes and margins for this business to be similar to FY 2015.

Hexion PAC

The integration of Hexion PAC is well underway and progressing to plan. The underlying annual EBITDA and expected synergies remain unchanged from the guidance given to the market in March 2016.

Foreign currency

The Group has continued to benefit from the translation effect of the ongoing weakness of sterling. Average YTD FX rates are €1.24 and $1.38 which, if unchanged for the remainder of the year, would provide a translational benefit of approximately £10m for the full year.

Financial Position

The Group has generated strong cash flows in Q3, benefitting from Malaysian land sale and South African business sale receipts of £21m and £13m respectively. Net debt has reduced from £215m at 30 June to £159m at 30 September 2016.

The Group balance sheet remains strong with net debt/EBITDA ratio at circa 1.1x.  

Outlook

The Board's expectations for Full Year 2016 remain unchanged from the interim results in August. Looking forward, the outlook in 2017 also remains consistent with our previous expectations underpinned by resilient trading in Europe despite a challenging macroeconomic environment, the Asian Nitrile market continuing to evolve broadly in line with our expectations and the ongoing integration of Hexion PAC.

Capital Markets Day

Synthomer plc will be hosting a Capital Markets Day for analysts and investors on Thursday December 1st. Senior members of Synthomer's management team will provide an update on strategy as well as present on the Group's two core divisions and R&D and innovation capabilities.

-ENDS-

ENQUIRIES:

Calum MacLean, Chief Executive Officer	Charles Armitstead
Stephen Bennett, Chief Financial Officer	Teneo Blue Rubicon
Tel: + 44 1279 436211	Tel: + 44 207 260 2700

The Company will hold a conference call for investors and analysts at 0800 GMT today. 

Please dial [phone] entering conference ID: 31555005# to gain access to the call.

 

END

 

 

TSTBPBLTMBTMBBF