(Adds analyst comments, details; share movement)
July 11 Chemical maker Synthomer Plc
warned on full-year operating profit due to a further
strengthening of sterling and as its nitrile business in Asia
continued to face margin pressure.
Synthomer shares fell as much as 6.5 percent on Friday
morning, making the stock one of the top percentage losers on
the FTSE-250 Midcap Index.
The company, which supplies speciality emulsion polymers
used in construction, textiles, paper and latex gloves, said it
expected full-year operating profit to be lower by about 5
million pounds ($8.5 million) from last year due to further
strengthening of sterling.
Synthomer earlier expected a 4 million-pound hit to
operating profit due to the currency impact.
Operating profit in Asia in the first half would be about 4
million pounds lower than a year earlier as strong competition
and weak butadiene pricing continued to pressure margins,
Synthomer said. Butadiene is used in the production of synthetic
The company had indicated in early May that its Asia
business was performing below its expectations, but did not
quantify the impact.
Asia contributed 28 percent to total sales in 2013.
"NBR (nitrile butadiene rubber) has twice caused a
pronounced negative earnings impact (2012 and 2014), and despite
the growth prospects of the business, this part of the group
might be seen as a negative for earnings predictability,"
Barclays said in a note.
Barclays cut its price target on the stock to 284 pence from
Synthomer, formerly known as Yule Catto & Co, said it
expected demand for nitrile latex to grow and margins to firm as
the second half progresses. It also said it expected full-year
pretax profit to be broadly in-line with a year earlier.
Analysts on average were expecting the company to report a
pretax profit of 90.1 million pounds for the year ending
December, according to Thomson Reuters I/B/E/S. The company
reported a pretax profit of 90.1 million pounds in 2013.
"Clearly, further nibbling to consensus is unhelpful. But we
continue to consider both divisions operate at depressed
profitability, group cash flows and balance sheet are strong and
we expect dividends to be reviewed at the August interims,"
Jefferies said in a note to clients.
Shares in Synthomer were down 2.33 percent at 213.4 pence at
0900 GMT on the London Stock Exchange.
($1 = 0.5877 British Pounds)
(Reporting by Aastha Agnihotri in Bangalore; Editing by