Synthomer (SYNT) H2 2024 earnings summary

Executive summary

• Delivered robust growth in revenue (+5.1%), EBITDA (+9.2%), EBIT (+55%), and improved underlying EPS, despite three years of suppressed demand and mixed end-market trends in the chemicals sector.

• All three divisions achieved volume growth, with overall volumes up 8.4% year-over-year, driven by self-help actions and strategic delivery.

• Strategic transformation towards higher-margin specialty solutions is progressing, with specialty products now 55% of revenues and a higher share of EBITDA.

• Manufacturing site rationalisation reduced sites from 43 to 31, with compounds divestment completed and three more divestments in progress.

• Stable financial position supports strategy and earnings recovery, with deleveraging expected in 2025.

Financial highlights

• Group revenues for continuing business rose 5.1% on a constant currency basis to just under GBP 2 billion (£1,986.8m); group volume up 8.4%.

• EBITDA increased 9.2% to GBP 147 million (7.4% margin), and EBIT grew 55% to GBP 50.4 million.

• Underlying EPS improved to (2.5)p from (35.1)p year-over-year.

• Net debt at year-end was GBP 597 million (4.6x leverage), with over GBP 470 million undrawn committed liquidity.

• Free cash flow was negative due to non-recurring outflows, but positive free cash flow and deleveraging are expected in 2025.

Outlook and guidance

• Expect further earnings progress and positive free cash flow in 2025, even without material market recovery or divestment proceeds.

• Targeting GBP 25-30 million in additional self-help and strategic benefits in 2025.

• Volume growth guidance is 1-2% across most regions, with higher growth expected in NBR.

• CapEx expected to remain around GBP 84-85 million, with disciplined allocation to specialty and growth regions.

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