Synthomer (SYNT) made clear in January that its 2016 full-year results would smash previous expectations, and underlying pre-tax profits did just that, up more than a quarter to £122m. But the supplier of latices and speciality polymers still managed to deliver some positive surprises, including the announcement of another potentially earnings-enhancing acquisition.
Part of Synthomer's growth strategy involves buying businesses capable of enhancing its position in the speciality chemicals market. The €78m (£67m) acquisition of performance additives specialist Perstorp Oxo Belgium - actually based in Sweden - promises to do just that, at a cost that management estimates will fall to seven times adjusted cash profits once the full benefits of its integration are realised.
At constant currencies, revenues and underlying operating profit rose 11 per cent and 15 per cent in the period, respectively. The group's investment in new and existing businesses delivered growth across all regions. PAC, which was acquired last June, and favourable raw material prices combined with tighter cost controls and a greater proportion of new product sales (up two percentage points at 20 per cent) to outpace even recently upgraded analyst expectations.
Broker N+1 Singer forecasts adjusted pre-tax profit of £125m and EPS of 27.5p in 2017 (from £122m and 28.3p last year).
| SYNTHOMER (SYNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 446.5p | MARKET VALUE: | £1.52bn | |
| TOUCH: | 446.5-446.6p | 12-MONTH HIGH: | 470p | LOW: 300p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 96p* | NET DEBT: | 44% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 | 0.87 | 72.5 | 17.8 | 8.6 |
| 2016 | 1.05 | 137 | 32.5 | 11.3 |
| % change | +20 | +89 | +83 | +31 |
Ex-div: 8 Jun Payment: 6 Jul *Includes intangible assets of £356m, or 105p a share †Excludes special dividend of 7.8p | ||||
