Synthomer hikes divi as profits edge higher

Synthomer, the FTSE 250 chemicals company formerly known as Yule Catto, hiked its dividend by over a half in 2012 despite a slump in sales, as the company was able to register another year of record profits.

Synthomer, the FTSE 250 chemicals company formerly known as Yule Catto, hiked its dividend by over a half in 2012 despite a slump in sales, as the company was able to register another year of record profits.

A final dividend of 3.3p per share brings the total dividend to 5.5p, a 57% increase on the year before. Synthomer said it "reflects the board's previously stated commitment to a progressive dividend policy and to move the dividend cover to three times by 2015".

The company, which works in the coatings, construction, textiles, paper and rubber-glove markets, said sales slipped 12.4% from £1,268.8m to £1,111.8m as volumes fell 5.0%, affected by weak demand in Europe and North America.

Synthomer said that poor economic environment in Europe, weakening of the euro against sterling and tough conditions for its Asian nitrile latex business also impacted its performance.

However, profit before tax edged 2.2% higher from £96 to £98.1m as synergies and margin management offset the decline in sales. This was the company's second successive year of record profits and the sixth year in a row that it has seen an increase in the bottom line.

Earnings per share jumped 17% to 22.0p, helped by the benefit of the first whole year's trading of PolymerLatex, a rubber-based product manufacturer that was acquired in March 2011.

Chief Executive Adrian Whitfield 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."

Net debt was reduced from £164.3m to £155.8m by the end of the period.

While the company said it remains confident about 2013 after a "solid start" to the year, it expects the macro-economic environment in Europe to continue to result in challenging trading conditions.

Recommended

How to profit from India’s high-tech recovery
Share tips

How to profit from India’s high-tech recovery

Professional investor David Cornell of the India Capital Growth Fund, selects three of his favourite Indian stocks to buy now.
27 Sep 2021
Share tips of the week – 24 September
Share tips

Share tips of the week – 24 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
24 Sep 2021
Three strong Asian stocks trading at bargain prices
Share tips

Three strong Asian stocks trading at bargain prices

Professional investor Nitin Bajaj of the Fidelity Asian Values investment trust picks three stocks that dominate their industries, earn good returns o…
20 Sep 2021
Why it pays to face up to your investment mistakes
Investment strategy

Why it pays to face up to your investment mistakes

Buying stocks can be a complicated business. But selling stocks can be tricky, too – even if you sell for the right reasons. Max King explains how to …
17 Sep 2021

Most Popular

A nightmare 1970s scenario for investors is edging closer
Investment strategy

A nightmare 1970s scenario for investors is edging closer

Inflation need not be a worry unless it is driven by labour market shortages. Unfortunately, writes macroeconomist Philip Pilkington, that’s exactly w…
17 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021