Synthomer PLC (LON:SYNT) has upgraded its full year earnings guidance and reinstated its interim dividend following what it said was “strong trading momentum” across all its divisions during the third quarter.
In an update for the three months ended September 30, the polymer, sealant and chemicals specialist said as a result of the strong trading it now expects its 2020 earnings (EBITDA) to be around £232mln, 10% higher than previously forecast in August, while an interim dividend of 3p per share will be paid on November 10 with a final dividend also planned.
During the period, Synthomer said volumes and margins in its performance elastomers division were ahead of the prior year, reflecting “strong demand” in Nitrile Latex following the coronavirus pandemic and improved conditions for SVR latex through the quarter.
The group also said its functional solutions business had continued to benefit from the integration of OMNOVA and is trading ahead of the prior year. However, it said some market sectors are demonstrating stronger resilience than others, while end market and geographic diversification remained a key strength of the business.
The industrial specialities business also continued to improve in the period following a wider second quarter, which was impacted by the coronavirus, although current run rate volumes and margins are on or above the prior year.
Looking ahead, Synthomer said the integration of OMNOVA is proceeding ahead of schedule and it expects to achieve a US$20mln run rate by the end of the year, which rises to US$40mln by the end of 2022. The firm has also decided to close its SBR site in Oulu in Finland by the end of the first quarter of 2021, while consultations are continuing regarding a plant in Marl in Germany with an outcome expected in the fourth quarter of this year.
The group added that additional Nitrile Latex capacity in Malaysia is on schedule for beneficial operation in the fourth quarter of 2021 to further support strong demand seen following the coronavirus pandemic.
"This is a very encouraging performance with all business divisions performing ahead of prior year. Alongside this strong momentum, we have made significant strategic progress, with a decision to close our site in Oulu and the integration of OMNOVA continuing ahead of our initial expectations”, Synthomer chief executive Calum MacLean said in a statement.
“This underpins our confidence for the remainder of this year and beyond leading to an upgrade to our guidance for the full year and reinstating our interim dividend", he added.
Shares in Synthomer climbed 17.1% to 389.8p in mid-morning trading.