Synthomer PLC Q3 Trading Update (9815B)
October 14 2020 - 01:00AM
UK Regulatory
TIDMSYNT
RNS Number : 9815B
Synthomer PLC
14 October 2020
October 14th 2020
Synthomer plc
Q3 Trading Update
FY2020 EBITDA guidance raised 10%, interim dividend reinstated
and pro forma leverage expected to reduce to circa 2.0x EBITDA by
end of 2020
Synthomer plc ("Synthomer" or "the Group") today brings forward
its update on trading for the third quarter ("Q3") ended September
30th 2020.
Strong trading momentum across all three business divisions
Performance Elastomers volumes and margins are ahead of prior
year reflecting strong demand in Nitrile Latex following the
COVID-19 pandemic and improved conditions in SBR latex through
Q3.
Functional Solutions continued to benefit from the integration
of OMNOVA and likewise is trading ahead of prior year albeit some
market sectors are demonstrating stronger resilience than others.
End market and geographic diversification remains a key strength of
our Functional Solutions business.
Industrial Specialities continued to improve in Q3 following a
weaker Q2 impacted by COVID-19. Current run rate volumes and
margins are on or above prior year.
FY EBITDA guidance raised 10%
At the time of its Interim Results in August, the Group said
that it expected FY 2020 EBITDA to be broadly-in-line with market
consensus of GBP211 million (source Teneo). Synthomer now expects
FY 2020 EBITDA to be circa GBP232 million, 10% higher than where it
was envisaged to be in August.
Proforma leverage expected to reduce to circa 2.0x EBITDA
The Group remains highly cash generative and now expects
proforma leverage to reduce to circa 2.0x net debt to EBITDA by
December 2020.
Interim dividend reinstated
As a result of the Group's strong trading performance and cash
generation, the Board has decided to reinstate the interim dividend
which was suspended in April. The Board has declared an interim
dividend of 3.0 pence per share payable on November 10th 2020 to
shareholders on the register at close of business on October 23rd
2020. The Board has also fully reinstated its existing dividend
policy and intends to pay a final dividend in line with its capital
policy.
Further strategic progress
The integration of OMNOVA is proceeding ahead of schedule. As
previously stated, the Group now expects synergies to achieve a $20
million run rate by the end of year (increased from $15 million)
and a $40 million run rate by the end of 2022 (increased from $30
million).
In August, the Group confirmed that it was in a consultation
process with employees at its SBR site in Oulu (Finland) concerning
future options for the site. The consultation process at Oulu is
complete and the decision has been made to close this site by the
end of Q1 2021. Consultations are continuing at Marl (Germany) with
an outcome expected in Q4 this year. Synthomer remains committed to
the SBR markets in Europe and is confident of being able to service
customers from its Central European asset base.
Our additional Nitrile Latex capacity in Malaysia is on schedule
for beneficial operation in Q4 2021 to further support the strong
demand we have seen following the COVID-19 pandemic.
Calum MacLean, Chief Executive of Synthomer said:
"This is a very encouraging performance with all business
divisions performing ahead of prior year. Alongside this strong
momentum, we have made significant strategic progress, with a
decision to close our site in Oulu and the integration of OMNOVA
continuing ahead of our initial expectations. This underpins our
confidence for the remainder of this year and beyond leading to an
upgrade to our guidance for the full year and reinstating our
interim dividend."
Further information:
The Company will hold a conference call for investors and
analysts at 0900 BST today:
Dial in number: 08003589473 PIN: 69896742#
Calum MacLean, Chief Executive
Officer
Steve Bennett, Chief Financial Tel: + 44 1279 436211
Officer
Tim Hughes, President, Corporate
Development
Charles Armitstead/ Matt Denham, Tel: + 44 7703 330 269/ +
Teneo 44 7825 735596
Investor Seminar
Synthomer will be hosting an Investor Seminar on Wednesday 18th
November to focus on the Group's strategy post its acquisition of
OMNOVA, with a particular focus on its Functional Solutions
business.
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END
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