Synthomer (SYNT) capitalised on a favourable supply/demand imbalance in the Asian nitrile market last year, investing in innovation and capacity. The upshot was record underlying pre-tax profit of £95m - an 11 per cent increase not to be sniffed at, considering the £12.5m forked out on staff bonuses and £10m hit from currency movements.
The star of the show was the Asia and rest of world segment. Operating profit there more than doubled to £40.5m as the chemical firm benefited from robust construction and coating markets and strong appetite for its new components used to make ultra-thin surgical gloves.
Coupled with the positive effect that cheaper raw material costs had on working capital, this progress also helped to trigger record cash generation. Extra funds will be reinvested, which looks a smart move given that the proportion of sales attributed to new products grew 2 percentage points to 18 per cent in 2015.
But a cautious outlook, warning global economic uncertainty could weigh on the group's performance in the year ahead, put a dampener on an otherwise positive newsflow. Despite demand from nitrile glove manufacturers showing little sign of easing, a sector-wide ramping up of capacity could weigh on earnings there. Broker Canaccord Genuity forecasts adjusted pre-tax profit of £93.7m and EPS of 21.2p in 2016, compared with £95.3m and 21.5p in 2015.
| SYNTHOMER (SYNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 303p | MARKET VALUE: | £1bn | |
| TOUCH: | 301-303p | 12-MONTH HIGH: | 364p | LOW: 270p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 73p* | NET DEBT: | 31% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.06 | 39.5 | 9.8 | 3.5 |
| 2012 | 1.11 | 58.8 | 15.6 | 5.5 |
| 2013 | 1.05 | 59.1 | 14.2 | 6.0 |
| 2014 | 0.99 | 53.8 | 13.3 | 7.8† |
| 2015 | 0.89 | 72.5 | 17.8 | 8.6 |
| % change | -10 | +35 | +34 | +10 |
Ex-div: 2 Jun Payment: 4 Jul *Includes intangible assets of £274m, or 80p a share †Excludes special dividend of 7.8p | ||||
