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Synthomer PLC on Thursday cuts its expectations for the remainder of the year as de-stocking following the end of the Covid-19 pandemic continues to damp demand for its medical gloves.
The Essex-based chemicals maker said in a trading update that it now expects full-year earnings before interest, taxation, depreciation and amortisation to be 10% to 15% below its previous expectations.
Shares in Synthomer were trading 33% lower at 92.25 pence on Thursday morning.
Synthomer reported in August that inventory levels of medical gloves remained high, reducing demand. De-stocking since then has ‘significantly reduced’ nitrile butadiene rubber production volumes, which are essential to medical glove production, and delayed a return to NBR growth.
Production volumes have decreased further during the third quarter as de-stocking has continued. As a result the board anticipates only ‘modest profitability’ for the second half of the year in its Performance Elastomers division, which is responsible for medical glove production.
The company noted that while end-customer demand for medical gloves remains similar to pre-Covid levels, the destocking impact is not expected to abate before the end of 2023.
Synthomer also cited the deterioration in economic circumstances, which has reduced demand in construction and coatings end markets. This has hurt trading in Synthomer's European business.
The group said that in the meantime it is focused on deleveraging and cash generation. It is also progressing ‘a number of strategic initiatives’ to reduce costs, capital expenditure and working capital.
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