Synthomer stock rises on upbeat trading update

Published 28/01/2025, 10:00
© Reuters.

Investing.com -- Shares of Synthomer (LSE:LON:SYNTS) climbed 4% following the company's optimistic fourth-quarter trading update.

The UK-based specialty chemicals company today announced it expects to report sales of approximately £2.0 billion, surpassing the consensus of £1,965 million. EBITDA is anticipated to be between £145-148 million, in line with the consensus of £147 million.

The company noted that while the second half of 2024 experienced a slower volume recovery compared to the first half, the fourth quarter saw improvements, particularly in the gloves and construction markets.

Synthomer also reported strong gross margin performance in the fourth quarter, attributing this to progress on self-help initiatives. The expected net debt stands at around £597 million, higher than consensus expectations.

Looking ahead, Synthomer expressed confidence in achieving further earnings progress in the fiscal year 2025, even without a recovery in end markets.

This outlook is supported by strong fourth-quarter exit margins in the specialty business and volume improvements in the Health and Protection (H&P) segment. Over the medium term, the company remains optimistic about its potential to double earnings.

Jefferies analysts commented on the update, stating, "the vibes around FY25F do appear to be more positive - there is still very little in the way of an inflection in the order book, but commentary around 4Q margins is positive, accompanied by confident commentary around earnings 'progress' in FY25F and beyond, and as such, we expect a positive reaction to the update (we expect it may be another volatile year for the share price).

Consensus may be a touch high in the absence of any recovery, but we wouldn't expect FY25F estimates to change much on the back of this."

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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