Synthomer (SYNT) H1 2025 earnings summary

Executive summary

• EBITDA grew 5.4% in constant currency to £77.8m, with margin up 110bps year-over-year, despite an 8.8% revenue decline due to lower volumes and volatile demand from tariff changes.

• Strategic transformation advanced with cost reduction, portfolio simplification, divestment of William Blythe, and further plant rationalisation, reducing manufacturing sites to under 30.

• Launched a new £20-25m cost reduction programme, targeting £9m in H2 2025 and annualised savings by 2026, including a global headcount reduction of around 250 roles.

• Net debt increased to £638.3m from £597m at year-end, mainly due to seasonal working capital, but committed liquidity exceeded £430m at period end.

• Outlook anticipates some earnings progress and broadly neutral free cash flow for 2025, with subdued demand expected to persist and dividends suspended until leverage falls below 3x.

Financial highlights

• Revenue from continuing operations fell 8.8% year-over-year to just over £925m, mainly due to lower volumes and tariff-related demand volatility.

• EBITDA rose to £77.8m, with margin up to 8.4% from 7.3% year-over-year.

• Underlying operating profit was stable at £28.3m; underlying EPS fell to (3.6)p from 1.3p in H1 2024.

• Free cash flow for H1 2025 was negative (£30.3m), but broadly neutral FCF is expected for the full year.

• Net debt to EBITDA at 4.8x, within covenant limits.

Outlook and guidance

• Demand expected to remain subdued for the rest of 2025 due to trade tensions and geopolitical uncertainty.

• Free cash flow expected to be positive in H2 and broadly neutral for the full year.

• Additional £20-25m cost reduction programme launched, with £9m benefits expected in H2 2025.

• Medium-term targets: mid-single-digit % revenue growth, EBITDA margin mid-teens, ROIC 15%+, leverage 1-2x net debt/EBITDA.

• Dividends remain suspended until leverage falls below 3x.