Synthomer has reduced its full-year profit estimate and warned of further cuts to its forecasts as it struggles with waning demand from European and US construction markets. The supplier of emulsion polymers, used in construction, textiles, paper and latex gloves, said a 3 per cent drop in third-quarter volumes in its European and US businesses means pre-tax profits will fall "slightly" below its £87.8m consensus.
Shares in the company fell 7 per cent on the profit warning, and have dipped throughout the year in response to concerns surrounding Synthomer's 80 per cent exposure to Europe. As the UK chemical industry's biggest market, sluggish growth on the continent has caused widespread de-ratings in the sector this year, with the fates of Alent, Croda, Johnson Matthey and Victrex all inextricably linked to consumer demand there.
Construction, in particular, has been a casualty, with demand for Synthomer's dispersion polymers - used to make paint and varnish - being sapped as a result. Elementis, too, could be a victim of this construction squeeze, as most of its profits come from its coating business, which sells additives that enhance the flow and feel of paint.
