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.

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.

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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.