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magazineSynthomer delivers strong trading in US and Europe
Synthomer (SYNT) 495P
Gain to date: 1.3%
Original entry point: Buy at 488.6p, 22 March 2018
Shares in Synthomer (SYNT) have nudged up 1.3% to 495.8p since we flagged the chemicals business as a Great Idea in March.
A mixed trading update on 26 April is not helping the stock find direction.
The company, which supplies aqueous polymers to boost the performance of a variety of products, is investing significantly in its sites in Malaysia and Germany to meet growing demand.
Urbanisation, an ageing population and stricter legislation are all drivers for this market, according to the £1.7bn business.
In the first quarter of 2018, Synthomer delivered another strong performance in Europe and North America, reflecting higher volumes from its acquisitions of Speciality Additives and Pischelsdorf SBR.
Synthomer says nitrile latex volumes were ‘marginally higher’ compared to a weaker comparative period when customer spending was hit by a volatile raw material environment.
However, Synthomer remained only ‘cautiously optimistic’ on nitrile latex demand growth and margin development ahead of its 90 kilotonne capacity expansion in Malaysia later this year.
Nitrile latex demand is forecast to grow at an annual rate of between 8% and 10%.
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