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

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Lab-grown meat: the new agricultural revolution
Soft commodities

Lab-grown meat: the new agricultural revolution

Vegan alternatives are taking off, but the future of food technology lies in lab-grown meat – cultivating steaks and burgers from animal cells, says A…
16 Apr 2021