Synthomer gives cautious outlook as demand weakens

Shares in chemicals company Synthomer dropped nearly 10 per cent on Thursday morning after the company said demand in Europe was weaker than anticipated during March and April, driving the overall group performance lower.

Shares in chemicals company Synthomer dropped nearly 10 per cent on Thursday morning after the company said demand in Europe was weaker than anticipated during March and April, driving the overall group performance lower.

The company said that the macro-economic environment in Europe has remained challenging and this has continued to have an impact on demand.

"Our Europe and North America (ENA) business experienced 7.0% year-on-year volume declines in March and April. Weakness continued to be most evident in construction and related areas, in part due to the adverse weather conditions," the group said.

"In Asia and Rest of the World, trading has been ahead of our expectations and demand across all business areas remains strong. Nitrile has outperformed our expectations and we now expect full year nitrile operating profit to be ahead of 2012.

"Our non-nitrile businesses have continued to trade well, with the benefits of strong demand restricted only by the capacity constraints we currently face in Asia."

The company stressed that is financial position was "robust" with net debt slightly higher over the first four months, reflecting the higher levels of capital expenditure anticipated for the year, and the normal seasonal working capital outflow.

Synthomer added: "Continued weakness in the macro-economic environment in Europe has resulted in challenging trading conditions for our business and, given the performance of our ENA business in March and April, we remain cautious about the outlook for the year.

"We are encouraged by the progress being made in our Asian business, with demand growth remaining strong and improved nitrile market dynamics. The board expects this relative strength in Asia will partially offset the weakness being seen in Europe."

The share price fell 9.42% tp 203.80p by 12:45.

NR

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