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4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Synthomer PLC    SYNT   GB0009887422

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Synthomer : Chemicals maker Synthomer sees 2016 profit ahead of estimates

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01/20/2017 | 05:03pm CEST

Chemicals maker Synthomer estimated 2016 profit ahead of market expectations after stronger-than-expected performance in Europe and Asia and a weak sterling boosted fourth-quarter trading, pushing its stock to a record high.

The company, which supplies speciality emulsion polymers used in construction, textiles and latex gloves, said it now expected 2016 pretax profit of 120 million pounds, which at least two analysts said beat their estimates.

Canaccord Genuity raised its full-year earnings expectations by about 8 percent for 2016 and 3 percent for 2017. It also hiked its target price to 425 pence from 410 pence.

Synthomer, which counts the euro <EURGBP=> as its largest trading currency, said currency translation was expected to boost 2016 results by about 12 million pounds. The sterling fell to a multi-year low after Britons voted to leave the EU.

"However, this could easily unwind within the next 6 months if the sterling strengthens, and capacity discipline in the nitrile market disappears," Derek Mitchell, Senior Fund Manager at Royal London Asset Management, one of Synthomer's top 10 investors said.

BEYOND CURRENCY

Synthomer's core business also reported better-than-expected trading over the fourth quarter ended Dec. 31.

The company's North America and Europe business, which accounts for three-fourths of its trading profits, benefitted from strong performance across segments.

Its Asia nitrile business also performed modestly ahead of expectations as it experienced a slower-than-expected negative impact of additional market capacity.

The dynamic in the Asian nitrile business would be one to watch in 2017, N+1 Singer analyst James Tetley wrote in a client note.

Ahead of Friday's surprise trading statement, analysts' consensus for pretax profit at constant currencies was 98.3 million pounds, according to figures compiled for Synthomer.

The company said it expected its European business to show resilience in 2017 despite volatile raw material and macroeconomic environments, while its Asian nitrile unit would be further impacted by additional industry capacity introduced in 2016.

Synthomer bought U.S.-based Hexion Performance Adhesives & Coatings for $226 million in March to strengthen its presence in the United States and Asia.

"The outlook for Synthomer remains a story of future M&A activity, but with strong fundamentals, management will be backed by shareholders should they need to raise further capital to fund these acquisitions," Royal London Asset Management's Mitchell said.

Synthomer shares were up 11.2 percent at 419.9 pence at 1506 GMT, making them one of the top percentage gainers on London's FTSE midcap index <.FTMC> on Friday.

(Reporting by Esha Vaish in Bengaluru and and Kate Holton in London; Editing by Sunil Nair and Martina D'Couto)

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Financials ( GBP)
Sales 2017 1 408 M
EBIT 2017 139 M
Net income 2017 81,9 M
Debt 2017 206 M
Yield 2017 2,41%
P/E ratio 2017 18,84
P/E ratio 2018 16,45
EV / Sales 2017 1,30x
EV / Sales 2018 1,26x
Capitalization 1 629 M
Chart SYNTHOMER PLC
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Synthomer PLC Technical Analysis Chart | SYNT | GB0009887422 | 4-Traders
Technical analysis trends SYNTHOMER PLC
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 4,86  GBP
Spread / Average Target 1,4%
EPS Revisions
Managers
NameTitle
Calum G. MacLean Group Chief Executive Officer & Executive Director
Neil Anthony Johnson Non-Executive Chairman
Martin Hallam Vice President-Operations
Stephen G. Bennett CFO, Executive Director & Head-Investor Relations
Alexander Gordon Catto Non-Executive Director
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