Weak demand from continental European customers helped drive a 10 per cent slide in speciality chemicals group Synthomer's (SYNT) half-year underlying operating profit, to £48.6m. Moreover, a reliance on construction-related customers in developed economies means that second-half profits will be hit by seasonal factors - despite a noticeable recent improvement in the UK's prospects.
Admittedly, management has been working to keep production costs down - measures have included closing three European plants. But sales are under pressure - revenue in the Europe and North America unit, for example, fell 10 per cent to £396m, while operating profit there tumbled 14.6 per cent to £48.5m. A construction squeeze helps explain that, reflecting lower demand for polymers in associated areas such as flooring and coatings, and divisional volumes fell 5.1 per cent year on year. That contrasted with the group's emerging markets performance - the Asia & rest of the world division saw volumes rise 8.1 per cent and sales were only 2 per cent lower at £162m. Operating profit there grew 4.5 per cent, to £11.5m.
Analysts at Deutsche Bank have flagged up the possibility of downgrades for the full year - they currently expect full-year pre-tax profit of £91m, giving EPS of 20.2p (from £98m and 22.1p in 2012).
SYNTHOMER (SYNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 201p | MARKET VALUE: | £683m | |
| TOUCH: | 200-201p | 12-MONTH HIGH: | 231p | LOW: 139p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 92p* | NET DEBT: | 46% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 571 | 36.4 | 7.60 | 2.20 |
| 2013 | 524 | 33.0 | 7.70 | 2.40 |
| % change | -8 | -10 | +1 | +9 |
Ex-div: 9 Oct Payment: 7 Nov *Includes intangible assets of £377m, or 111p a share | ||||
