Synthomer warns on full-year profits
Synthomer warned on profits on Thursday as it noted that macroeconomic conditions have deteriorated further since August, with post-Covid customer de-stocking set to last until at least the end of next year.
The company, which supplies aqueous polymers, said at the time of its interims in August that inventory levels of medical gloves remained high after the pandemic, with reduced demand.
The associated de-stocking significantly reduced nitrile butadiene rubber (NBR) production volumes in the first half and delayed a return to pre-pandemic NBR growth.
During the third quarter, this de-stocking has continued, with production volumes further reduced, it said and Synthomer now expects modest profitability in Performance Elastomers for the second half.
"Whilst underlying end-customer demand for medical gloves remains similar to pre-Covid levels, the destocking impact is not expected to abate before the end of 2023," the company said.
In addition, demand in construction and coatings end markets has softened amid deteriorating macroeconomic conditions, impacting trading in the European business.
As a result of these factors, Synthomer now expects full-year earnings before interest, taxes, depreciation and amortisation to be 10% to 15% below its previous guidance.
"The group is focused on deleveraging and cash generation and is progressing a number of strategic initiatives and operational actions to reduce costs, capital expenditure and, as indicated in August, working capital," it said.
At 1210 BST, the shares were down 37% at 86.80p.