Despite a somewhat mixed operating performance, Synthomer's (SYNT) shares jumped over 5 per cent on the day these half-year figures appeared. That's because the specialist polymer manufacturer delivered a chunky dividend hike and confirmed that it intends to return excess cash to shareholders in future.
In fact, Synthomer - formerly Yule Catto - saw underlying operating profit fall nearly 9 per cent to £51.1m. That was partly down to a £2.5m currency hit, but it mainly reflected increased competition and weaker profit margins in its Asian markets. Still the group did see a sustained, albeit modest, recovery in Europe. Cash profit margins in Europe have stabilised following a fall-away during 2013 and management is confident that sales volumes are set to benefit from several product launches this year. Indeed, volumes for the European and North American division grew marginally year-on-year, while operating profit here increased by 1.9 per cent to £47.8m (on a constant currency basis).
Synthomer's businesses continue to generate strong cash flows, too. This underpins management's new policy of paying special dividends when appropriate and has also helped the group to reduce net debt by a quarter since 2013's half-year stage to £115m.
Prior to these figures JP Morgan Cazenove was forecasting adjusted full-year EPS of 19.8p (from 20.7p in 2013) rising to 20.6p in 2015.
| SYNTHOMER (SYNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 219p | MARKET VALUE: | £744m | |
| TOUCH: | 215-221p | 12-MONTH HIGH: | 295p | LOW: 197p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 84p* | NET DEBT: | 39% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 524 | 32.9 | 7.7 | 2.4 |
| 2014 | 478 | 29.9 | 7.0 | 3.0 |
| % change | -9 | -9 | -9 | +25 |
Ex-div: 8 Oct Payment: 6 Nov *Includes intangible assets of £329m, or 97p a share | ||||
