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Synthomer PLC shares tumbled on Tuesday as its half-year was hit by soft demand for nitrile gloves, after a record performance the year before.
The Essex-based chemicals maker said pretax profit in the first half dropped 55% to £115.5 million from £254.4 million a year before.
Shares in Synthomer were 11% lower at 209.64 pence each in London on Tuesday morning.
This was despite growth in revenue, which was 8.5% higher at £1.22 billion compared to £1.23 billion.
The decline in profit was mostly due to the outperformance in the firm's Performance Elastomers division in the year before.
‘Around the world, the exceptional demand for [nitrile butadiene rubber] gloves during the Covid-19 pandemic resulted in a record performance last year. Current destocking has meant that demand has softened substantially, resulting in lower nitrile volumes, revenues and [earnings before interest, tax, depreciation and amortisation],’ the company explained.
NBR is frequently used in latex and surgical gloves.
Operating profit dropped 87% to £27.8 million for the PE division. Profit growth was seen across all other divisions compared to 2021, however.
Ebitda of £173.1 million trailed behind £322.7 million the year before, but compared favourably with £100.2 million and £99.7 million in 2020 and 2019 respectively, the firm noted.
Synthomer proposed an interim dividend of 4.0p, down year-on-year from 8.7p.
‘Our performance reflects the benefits of recent acquisitions with Functional Solutions continuing to leverage its increased global reach and portfolio depth and Adhesive Technologies having a strong first quarter in our group, in line with our expectations. We have successfully managed higher costs and have passed them through, helping to enhance our profitability. Whilst NBR market conditions have yet to normalise following a period of exceptional Covid-19 related demand, we are focused on the tremendous opportunities available elsewhere in the group,’ said Chief Executive Michael Willome.
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