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

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

The rising dollar is proving bad news for most other assets – will it last?
Investment strategy

The rising dollar is proving bad news for most other assets – will it last?

Precious metals, stocks and pretty much every other asset has taken a tumble as the US dollar strengthens. Dominic Frisby looks at how long this trend…
23 Sep 2020
The electric-car bubble could get an awful lot bigger from here
Renewables

The electric-car bubble could get an awful lot bigger from here

The switch to electric cars is driving a huge investment bubble. But that’s not necessarily a bad thing, says John Stepek. Fortunes will be made and l…
24 Sep 2020
Why you should stuff your end-of-pandemic portfolio with Chinese stocks
China stockmarkets

Why you should stuff your end-of-pandemic portfolio with Chinese stocks

For an end-of-pandemic portfolio, you need assets that can cope with today’s volatility. And that, says Merryn Somerset Webb, means Chinese stocks.
14 Sep 2020