A strong pick up in sales in Asia and the rest of the world is behind a healthy rise in operating profit at aqueous polymers specialist Synthomer (SYNT). Shares in the £1.1 billion cap are up 2% at 336.5p after the group posted a respectable set of interims for the half year to the end of June. Operating profit of £55.4 million was driven by a 159% increase in Asia and RoW (ARW) which was in turn somewhat offset by turnover in Europe and North America (ENA) being down 11.9% on a reported basis.
Group turnover fell by 8.1% to £468.7 million and this can largely be blamed on adverse exchange rates and lower raw material prices reflecting the lower oil price.
Sales volumes in ARW rose 11.1% as a result of strong demand and tight market conditions in
Asian nitrile latex volumes but also in Dispersions across all geographies. In the group's ENA regions, like for like volumes were down 1.7% and this is down to continued softness in paper, an indifferent performance in carpet. The group did however report good progress in construction & coatings, functional polymers and foam markets.
Harry Philips at Canaccord sees the stock as a 'Buy' with a 370p price target on the basis that ' the investment proposition is compelling with the potential M&A catalyst and core growth opportunities supported by an alternative return profile, the special dividend, as a balancing item.