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Investing.com -- Synthomer PLC (LON:SYNTS) on Tuesday reported first-half results that fell short of analyst expectations, sending shares down 16% as the specialty chemicals maker faced increased end-market volatility following recent tariff developments.
The company posted sales of £925 million, significantly below consensus estimates of £1,012 million, while EBITDA came in at £77.8 million compared to analyst expectations of £79.6 million.
Despite the revenue miss, EBITDA increased 5.4% in constant currency with margins improving 110 basis points versus the first half of 2024.
Synthomer’s volume declined 7.1% compared to the first half of 2024, with revenue down 8.8% in constant currency. The company attributed this to customer demand volatility in the second quarter, particularly in May, though it noted some improvement in June.
Net debt rose to £638 million, pushing the covenant net debt to EBITDA ratio to 4.8x.
"We have delivered gross margin improvement and EBITDA growth in the period despite the challenging environment in our markets," said Synthomer CEO Michael Willome.
"Given demand in our end markets has become more uncertain, we have stepped up our focus on what we can control - launching an additional cost reduction programme, taking further steps in the transformation of the portfolio and allocating resources even more rigorously to prioritise derisking the balance sheet."
The company implemented a new £20-25 million cost reduction program expected to deliver approximately £9 million in benefits in the second half of the year to offset subdued end-market demand resulting from trade tensions.
Looking ahead, Synthomer maintained its expectation for "some earnings progress" over the 2024 continuing group EBITDA of £143.1 million, supported by previously identified £25-30 million in annual self-help and strategy benefits. However, the company now expects free cash flow to be broadly neutral rather than positive as previously indicated.
Divisionally, Coatings & Construction Solutions reported sales of £372 million and EBITDA of £35 million, while Adhesive Solutions posted sales of £298 million and EBITDA of £35 million.
The Health & Protection segment recorded sales of £254 million and EBITDA of £17 million.