Poland's Synthos 'bullish' but faces Europe ESBR struggle - bank

15 February 2013 16:32  [Source: ICIS news]

LONDON (ICIS)--Poland's Synthos is upbeat about butadiene price increases in China during January and February but knows it continues to face a challenge to its profitability from the weakened synthetic rubber market in Europe, an investment bank said on Friday.

Latest comments from the Synthos' management were “quite positive and bullish given the tough operating environment in Europe and the cautious outlook on European ESBR [emulsion styrene butadiene rubber]”, WOOD & Company analyst Piotr Drozd said in a note to investors.

“While the Chinese butadiene price rebounds seem to be a positive development, anecdotal data points to potential operating rate reductions at ESBR plants, which have trouble passing on the higher input costs to tyre buyers,” he added.

ESBR monomer margins continued to slide in the first quarter of this year, falling 5% month on month in January and 9% month on month in February, Drozd noted.

Given the strong first half of 2012, meeting and exceeding the 2012 company result of zloty (Zl) 925m ($296m, €221m) on the earnings before interest, tax, depreciation and amortisation (EBITDA) level in 2013 might be a challenge for Synthos, the analyst said.

“However, given a one-off Zl 155m [shares loss] booked in the second quarter of last year, meeting the 2012 unadjusted net profit of Zl 585m is within reach, we believe,” he added.

($1 = €0.75, $1 = Zl 3.13, €1 = Zl 4.18)

By: Will Conroy
+44 20 8652 3214

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