Rubber producers can expect prosperous times ahead – bank

10 August 2012 17:04  [Source: ICIS news]

LONDON (ICIS)--Synthetic rubber producers such as Poland-based Synthos may continue to enjoy prosperous times in the middle-term, investment bank Raiffeisen Centrobank said on Friday.

“Expectations of tyre producers to expand production globally, including recently announced [tyre producer] Bridgestone plans to increase tyre production capacities in Poland in 2014, coupled with forecasts of limited supply of butadiene and natural rubber confirm that the golden times for rubber producers may persist in the mid term,” said Dominik Niszcz, a Raiffeisen analyst.

The fundamental outlook for Synthos, the second-biggest synthetic rubber producer in Europe, for several quarters ahead “remains bullish”, he added.

Synthos has enjoyed soaring profitability in recent years. 

Several instances of extreme weather that undermined natural rubber producers in east Asia, in addition to rising global car ownership that has boosted demand for tyres and the EU's new 'green tyre' regulations, have greatly strengthened the market for high-performance rubber, Raiffeisen analysis said.

The average earnings before interest, tax, depreciation and amortisation (EBITDA) margin of Synthos in the rubber business over the last eight quarters amounted to 25%, well above the long-term EBITDA margin of approximately 15% for the chemical industry, Niszcz said

In late June, Synthos said it was working on plans to roll out rubber plants across central and eastern Europe.


By: Will Conroy
+44 20 8652 3214



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