Synthomer misses 2023 forecasts but cuts debt more than expected

Synthomer, the specialised chemical products group, has confirmed that both revenues and profits fell in 2023 but strong cash generation meant that net debt was lower than expected.

The company said it expects to report revenue of £2.0bn and underlying EBITDA in the range of £140-144m for the 12 months to 31 December, compared with £2.38bn and £249m in 2022, respectively.

According to analysts at Deutsche Numis, this would be "slightly lighter than consensus" which had pencilled in revenue and EBITDA figures closer to £2.2bn and £146m, respectively.

However, net debt at the end of the year stood at £499m, which the company said was "ahead of our expectations as a result of strong cash delivery in the final quarter". Since the start of 2023, Synthomer has reduced net debt by half, from £1.02bn previously, through a rights issue, divestment programme and a strong focus on cash conversion.

The company said trading in the fourth quarter was consistent with trends throughout 2023, with subdued volumes and limited visibility reflecting ongoing challenging macro conditions throughout the chemicals industry.

"We continue to execute our speciality solutions strategy, repositioning the Group to deliver on its substantial potential for value creation as market conditions begin to improve," said chief executive Michael Willome.

"In the near term, our focus remains on enhancing our strong positions in key speciality end-markets, optimising our business portfolio and cost position, and sustaining our demonstrated ability to generate free cash flow despite the challenging demand environment."

The stock was up 1% at 136p by 1015 GMT.