Dashed SBR market recovery hopes hit Poland's Synthos - bank

15 March 2013 15:20  [Source: ICIS news]

LONDON (ICIS)--Investment bank WOOD & Company has cut its earnings forecasts for Poland-based synthetic rubber producer Synthos, arguing that signs of a styrene butadiene rubber (SBR) market recovery have faded away, the bank said on Friday.   

“The initial signs of an SBR market recovery in early 2013 have proved to be much more fragile than anticipated, signalling continuous pressure on Synthos’ margins,” said Piotr Drozd, a chemical industry analyst at the bank.

“Depressed auto sales, flat European tyre sales volumes in 2013, and squeezed commodity and butadiene-naphtha margins provide little support for a pronounced recovery, resulting in a bitter outlook for Synthos’s estimated 2013 earnings,” he added.

WOOD & Company cut its forecast 2013 net profit for Synthos by 15% to Polish zloty (Zl) 619m ($193.4m, €148.8m). The company's net profit in 2012 was Zl 586m.

Asian butadiene (BD) prices corrected by 9% month on month in mid-March, with the speculative price rally losing traction due to poor end-market demand, Drozd said.

Synthos' first-quarter contract SBR spreads eased 19% quarter on quarter and fell 41% year on year, while a 13% quarter-on-quarter squeeze on the company's first-quarter BD-naphtha spreads largely erased Synthos’ benefits from upstream integration, he added.

($1 = €0.77)
($1 = Zl 3.20, €1 = Zl 4.16)

By: Will Conroy
+44 20 8652 3214

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