UK Synthomer swings to net profit of £57.9m despite sales fall

15 March 2013 12:41  [Source: ICIS news]

LONDON (ICIS)--Synthomer swung to a net profit of £57.9m ($87.7m, €67.3m) for the full year of 2012 from a net loss of £5.3m in 2011, as a fall in sales and volumes was offset by higher unit margins, the UK specialty chemicals company said on Wednesday.

Synthomer’s 2012 net profit was reported in accordance with International Financial Reporting Standards (IFRS). It is the first full year of trading since the acquisition of Germany-based emulsion polymer producer PolymerLatex for €443m in March 2011.

Group sales on an IFRS reported basis declined slightly by 0.4% year on year to £1.11bn, as volumes declined, particularly in Europe on the back of the eurozone crisis, and negative currency translation effects.

Synthomer, previously named Yule Catto & Co, reported that its operating profit on an IFRS reported basis in 2012 rose 38% year on year to £74.9m, on the extra profit from the PolymerLatex acquisition.

Adrian Whitfield, CEO, said: "Synthomer delivered a resilient performance in 2012, against challenging market conditions. In Europe, we continued to manage our margins and deliver the synergies arising from the PolymerLatex acquisition.

“In Asia, our non-nitrile business performed well this year, while the difficult conditions seen in our nitrile business have stabilised and our long term prospects in this area remain strong,” he added.

The CEO said the company's strategy is to focus on being a leading producer of aqueous polymers and to deliver growth through geographic expansion in emerging markets where it can benefit from technologies, research and development (R&D) and manufacturing capabilities developed in European markets.

Synthomer also said it expects having styrene butadiene rubber (SBR) latex manufacturing capability in Malaysia from the middle of this year and continues to look for further investment opportunities to expand the group’s footprint in Asia. The company completed a new 70,000 tonne/year nitrile latex capacity expansion in Pasir Gudang, Malaysia, at the end of 2012 and was commissioned during January this year.

“We have made a solid start to the year. Nevertheless, we expect the macro-economic environment in Europe to continue to result in challenging trading conditions through 2013,” Whitfield said.

“Our expectations for the Asian Nitrile market remain unchanged, with improvements expected from the end of this year. With our non-nitrile capacity in Asia fully utilised, we will continue to invest in capacity in emerging markets to build our platform for future growth beyond 2013.

"We expect demand growth in our emerging markets to remain strong and overall the board remains confident in the Group's long-term prospects and strategy," he added.

The company also said the integration of PolymerLatex is now essentially complete. In December last year, shareholders voted in favour of the proposed change of company name to Synthomer.

($1 = £0.66, €1 = £0.86)

By: Franco Capaldo
+44 (0)20 8652 3214

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