The successful integration of two recent acquisitions saw underlying half-year profit move in the right direction at chemicals group Synthomer (SYNT). It was up by 17.4 per cent to £71.6m, or 10.8 per cent on a constant-currency basis. The effect of the 'bolt-ons', in tandem with positive foreign exchange translations, helped to offset margin weakness in the Nitrile Latex market in Asia and ‘rest of the world’ locales. But trading also received a boost from continued R&D investment,with sales of new products up by a fifth in the Heritage business.
The two deals – dispersions business PAC and polymer additives specialist Oxo Belgium – pushed first-half volumes higher and contributed to a 37.4 per cent rise in operating profit across Europe and North America. By contrast, operating profit across Asia and the rest of the world fell from £24.2m to £18.1m, primarily reflecting the disposal of the South African business in late 2016 and a weaker trading environment in the Middle East, although this was consistent with what management said at the time of full-year results in March.
Operating cash flow fell significantly from £38.4m this time last year to £13m. That reflects ongoing investments in working capital, as well as higher inventory and trade receivables balances.
Analysts at Canaccord Genuity expect pre-tax profit of £126m for the year ending December 2017, giving EPS of 28.6p, compared with £122m and 28.1p in 2016.
| SYNTHOMER (SYNT) | ||||
| ORD PRICE: | 496p | MARKET VALUE: | £1.69bn | |
| TOUCH: | 496-497p | 12-MONTH HIGH: | 514p | LOW: 340p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 100p* | NET DEBT: | 63% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 446.2 | 57.4 | 14.0 | 3.50 |
| 2017 | 770.3 | 53.4 | 12.5 | 3.70 |
| % change | +73 | -7 | -11 | +6 |
| Ex-div: | 05 Oct | |||
| Payment: | 06 Nov | |||
| *Includes intangible assets of £410m, or 121p a share | ||||
