Synthomer lifts FY EBITDA guidance, reinstates interim dividend

Chemicals business Synthomer lifted its full-year earnings guidance on Wednesday and reinstated its dividend amid "strong" trading momentum in all three of its divisions.

At the time of its interim results in August, the company said it expected FY 2020 earnings before interest, tax, depreciation and amortisation to be broadly-in-line with market consensus of £211m. However, it now expects FY EBITDA of around £232m, up 10% on its August guidance.

In addition, Synthomer said it has decided to reinstate the interim dividend that was suspended in April "as a result of the group’s strong trading performance and cash generation". It declared an interim dividend of 3p per share, payable on 10 November. The company has also fully reinstated its existing dividend policy and said it intends to pay a final dividend in line with its capital policy.

Synthomer said volumes and margins in the Performance Elastomers division were ahead of the prior year due to strong demand in nitrile latex following the Covid-19 pandemic and improved conditions in SBR latex through the third quarter.

Meanwhile, the Functional Solutions segment continued to benefit from the integration of Omnova - the acquisition of which was completed in April - and is also trading ahead of last year, albeit some market sectors are demonstrating stronger resilience than others.

The Industrial Specialities arm continued to improve in the third quarter following a weaker second quarter, which was impacted by the pandemic. Current run rate volumes and margins are on or above the prior year, Synthomer said.

Chief executive Calum MacLean said: "This is a very encouraging performance with all business divisions performing ahead of prior year. Alongside this strong momentum, we have made significant strategic progress, with a decision to close our site in Oulu and the integration of Omnova continuing ahead of our initial expectations.

"This underpins our confidence for the remainder of this year and beyond leading to an upgrade to our guidance for the full year and reinstating our interim dividend."

At 1205 BST, the shares were up 19% at 395p.