Synthomer Profit Beats Estimates as CEO Flags Investment

Synthomer Plc reported annual earnings that beat analysts’ estimates as Chief Executive Officer Adrian Whitfield said he is evaluating additional investments to expand in emerging markets.

The company made a solid start to 2013, driven by demand for dispersions used in resins and coatings, Whitfield said in an interview. Synthomer reported an increase in adjusted earnings per share to 22 pence from 18.8 pence. Analysts predicted 21.1 pence.

“The situation in Asia is still pretty bullish,” Whitfield said today.

Synthomer reiterated that business conditions in Asia for nitrile latex, used in surgical gloves and condoms, have stabilized and an improvement is possible toward year-end. A European construction slump and a jump in capacity and aggressive pricing by Asian nitrile latex competitors have hampered the returns from Synthomer’s $592 million purchase of Polymerlatex in late 2010, its biggest ever acquisition.

Shares of Synthomer climbed as much as 1.7 percent before trading 0.6 percent lower at 223.10 pence in London as of 9:56 a.m. local time.


In Europe, the integration of PolymerLatex is a focus to obtain planned cost savings of 25 million pounds ($37 million) this year. Synthomer had to grapple with Asian rivals that increased capacity and dropped prices to take market share. The world’s biggest nitrile-latex supplier responded with it’s own price cuts to stop the “volume drain” and since then business conditions have stabilized in the region.

Whitfield said investments will be made in Asia to expand non-nitrile operations as factories are currently fully utilized. Synthomer’s range of products includes polymers used in adhesives and resins. Synthomer has “very specific” plans for expansion in the Middle East and is evaluating some other emerging market projects, Whitfield said in the interview.

The company reported net income of 56.6 million pounds, compared with an estimated 44.3 million pounds.

Debt declined to 156 million pounds from 164 million pounds. Leverage, at 1.2 times earnings, is at a reasonable level with room for bolt-on purchases, Finance Director David Blackwood said.

In terms of the availability of assets, it’s “not a bad scenario at the moment,” with companies assessing what areas they want to focus on and what business are peripheral, Blackwood said.

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