Synthomer H1 Earnings Call Highlights

Key Points

• Synthomer delivered a stronger-than-expected first half, with revenue up 6.7%, EBITDA up 13% and margins expanding to 10.1%. Growth was driven by specialty products, cost actions and supply-chain disruption benefits.
• The company raised its full-year outlook to slightly ahead of market expectations, forecasting positive free cash flow and covenant leverage of 4.0–4.35 times by year-end, versus 4.9 times at June 30.
• Portfolio reshaping and operational improvements remain priorities: Synthomer expects £150 million–£200 million from planned disposals, while CCS posted particularly strong growth and Adhesive Solutions continued its transformation program despite first-half site disruptions.

Synthomer LON: SYNT reported first-half 2026 revenue and earnings growth ahead of expectations, citing specialty-product growth, cost actions and its ability to respond to supply-chain disruptions. The chemicals group also raised its full-year outlook and said it expects improved cash generation and lower leverage by year-end.

Revenue from continuing operations rose 6.7% on a reported basis to £954 million, or 5.1% in constant currency, Interim CFO Iain Torrens said. Volumes increased 2.3% across the group, while EBITDA rose 13% and the EBITDA margin increased 80 basis points to 10.1%.

The company said EBIT increased 36% in its presentation, while Torrens described an almost 42% increase on the income-statement basis discussed during the call. Group profit before tax rose by £11.4 million to £12.7 million, including the effect of stronger performance in the Acrylate Monomers business and higher finance costs.

Synthomer attributed approximately £8 million of its first-half EBITDA improvement to recurring specialty growth, new products and cost measures. A further £6 million was linked more directly to market disruption in the second quarter, particularly in base chemical markets, which management does not expect to recur in the second half.

Division performance

All three divisions recorded revenue and volume growth. Coatings & Construction Solutions, or CCS, delivered 5.8% constant-currency revenue growth, with volumes up 2.5%. EBITDA in the division increased 33% to £46 million, and its margin expanded 220 basis points to 11.5%.

CCS benefited from demand for intumescent and high-performance coatings used in data centers and industrial applications, as well as growth in energy solutions and construction activity in Asia. The company said volumes in intumescent coatings doubled year over year, supported by AI data-center and infrastructure demand. Decorative coatings and consumer-material volumes declined slightly.

Adhesive Solutions reported constant-currency revenue growth of 2.6%, with volumes up 0.9%. EBITDA increased 4.5% to £36.7 million and the margin improved 20 basis points to 12.1%.

The division saw growth across regions, led by Asia and China, followed by the U.S. Packaging and tapes were the strongest end markets. Management also highlighted demand for sustainability-focused products, including CLIMA-branded lower-carbon products, and progress in medical applications and Chinese domestic markets.

However, the division experienced intermittent reliability issues at facilities in Texas and the Netherlands. Management estimated these issues reduced gross margin by about €10 million in the first half. The Middelburg, Netherlands, site had resumed operations, and the company said it was confident the disruptions would not recur in the second half. Adhesive Solutions remains on track to deliver £40 million of annualized transformation-program benefits by the end of 2026, with a target of at least £43 million.

Health & Protection and Performance Materials, or HPPM, reported revenue of £249 million, up 11.7% from the prior year, while EBITDA rose 13.7% to £24.9 million. Its margin improved 20 basis points to 10%.

Health & Protection volumes climbed 13.5%, as the company’s nitrile butadiene rubber, or NBR, operations benefited from supply disruptions affecting competitors during the Iran conflict. Torrens said pricing and activity were especially volatile in April and May, but management does not forecast the second-quarter performance to continue in the second half as pricing has normalized. Elsewhere in HPPM, volumes in continuing performance-materials businesses fell 5%, reflecting weaker demand in some foam products and specialty vinyl polymers.

Portfolio changes and balance sheet

Synthomer agreed in June to sell its Acrylate Monomers operation in the Czech Republic, with closing expected at the end of September. The business is being treated as discontinued under IFRS for the half-year results. Torrens said the operation delivered a £5 million EBITDA improvement during the period and was close to breakeven, compared with losses in the prior year.

The sale is expected to require a £5 million to £7 million dowry payment and is not expected to be deleveraging on its own. Management said it has three additional divestment projects under way, including two in due diligence and another that is expected to receive non-binding offers in September.

The company expects the broader disposal program to generate £150 million to £200 million of proceeds. Management said the sales are intended to further shift the portfolio away from base chemicals, reduce complexity and support debt reduction.

Net debt stood at £671 million at June 30, with covenant leverage of 4.9 times. Synthomer had nearly £270 million of committed liquidity following its April refinancing, which extended key bank and UKEF facilities to February 2029 and bonds to July 2029.

First-half working-capital outflows rose to £90 million because of higher raw-material prices and normal seasonal patterns. Underlying inventory volumes were down 8% from year-end. Excluding movements in receivables financing, underlying free cash flow was an outflow of £66 million, compared with a £57 million outflow a year earlier.

Outlook raised

Synthomer said it now expects full-year 2026 performance to be slightly ahead of current market expectations and well ahead of the prior year. The company expects second-half free cash flow to strengthen as working capital seasonally reverses and forecast assumptions take effect, leading to positive free cash flow for the full year on a basis excluding receivables-financing movements.

Management expects year-end covenant leverage to decline to between 4.0 times and 4.35 times, excluding any additional divestments, from 4.9 times at the end of June. Full-year capital expenditure is still expected to be about £70 million, while income-statement finance costs are forecast at £73 million to £75 million.

Torrens said July trading had been “reasonable” and order books were satisfactory, while noting continued geopolitical uncertainty. Management said the improved outlook is based primarily on recurring strategic progress, innovation and self-help measures rather than an assumption that the second-quarter supply disruption will persist.

About Synthomer (LON:SYNT)

Synthomer plc is a leading supplier of high-performance, highly specialised polymers and ingredients that play vital roles in key sectors such as coatings, construction, adhesives, and health and protection – growing markets for customers who serve billions of end users worldwide. Headquartered in London, UK and listed on the LSE since 1971, we employ c.3,800 employees across our five innovation centres of excellence and 29 manufacturing sites across Europe, North America, Middle East and Asia.

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