Continued progress in line with expectations; Full Year 2017 outlook unchanged
Synthomer plc ('Synthomer' or 'the Group') today issues a trading update for the third quarter ('Q3') ended September 30th 2017.
Europe and North America
Europe and North America continued to trade well and in line with our expectations. Q3 reported volumes and unit margins were in line with the same period last year. On a segmental basis, we saw some weakness in Dispersions for Construction and Coatings applications but this was offset by a robust performance in Latex for the Paper and Foam markets.
Our investment programme in Germany to expand our Dispersions capacity remains on schedule for commercial production in Q3 2018.
During the quarter, we announced the acquisition of BASF’s Austrian Latex business and assets for an enterprise value of €30million. The acquisition is expected to complete early in 2018 following receipt of regulatory approvals and satisfaction of other closing conditions.
Asia and Rest of World
Asia and Rest of World also continued to trade in line with our expectations. Volumes were flat versus the same period last year albeit the underlying market for Nitriles continued to grow at more than 10%. As expected, following the introduction of additional industry capacity mid 2016, unit margins were lower than Q3 2016 but have remained in line with H1 2017. Our investment plan to add further nitrile capacity at our plant in Malaysia remains on track and is expected to come on line in Q3 2018.
The Group expects approximately £4m of benefit from the translation effect relating to the weakness of sterling experienced in the first half of the year. Assuming rates remain broadly unchanged for the remainder of the year, our expectation is that there will be no further benefits from currency.
The Group has continued to generate strong cash flows in Q3 and the balance sheet remains strong with net debt/EBITDA ratio at circa 1.3x at the end of the quarter.
FY 2017 Outlook Unchanged
We remain focused on driving sustainable growth whilst also continuing to evaluate acquisition opportunities. The Board's expectations for Full Year 2017 remain unchanged from the interim results in August, underpinned by resilient trading in Europe and the Asian Nitrile market continuing to evolve in line with our expectations.
Calum MacLean, Chief Executive Officer +44 1279 436 211
Stephen Bennett, Chief Financial Officer
Charles Armitstead, Teneo Blue Rubicon +44 203 603 5220
The Company will hold a conference call for investors and analysts at 0800 GMT today.
Please dial: +44 (0) 808 2370030 entering conference ID: 57615130# to gain access to the call.