Synthomer hit by 46% drop in first-half earnings

LONDON—Synthomer P.L.C. has linked a 46-percent year-on-year drop in first-half earnings (EBITDA), to $212 million (£173.1 million)—on 8.6-percent higher sales of $1.6 billion—to a decline in its Performance Elastomers' nitrile rubber business.

Performance Elastomers revenues dropped 31.8 percent year-on-year to $460.9 million, as volumes fell 21 percent to 374.2 metric kilotons. Earnings (EBITDA) came in 81.3-percent lower at $51.2 million.

Demand for nitrile butadiene rubber related to COVID-19 fell back from an "exceptional" pandemic-related peak of a year ago, the United Kingdom group reported Aug. 2.

"Current destocking has meant that demand has softened substantially, resulting in lower nitrile volumes, revenues and EBITDA the first six months of 2022," said Synthomer.

Margins in the health and protection sector were significantly down, reflecting market conditions driven by destocking of nitrile gloves, the company added; however, it described the decline as "temporary."

Volumes in Synthomer's overall Performance Materials business, which also includes compounds and foam activities, fell 10 percent, against a strong comparative period.

"We believe that underlying demand for nitrile gloves will continue to grow with broader applications in catering, entertainment, security and health-related industries," Synthomer said. "The business is thus well positioned to capture the long-term growth."

Regarding the full-year outlook, CEO Michael Willome said stock levels in the global nitrile rubber glove industry "remain high, delaying a return to pre-pandemic NBR growth.

"Although we, like our customers, have paused some investment in capacity—nonetheless we continue to look for opportunities to ensure we remain well-placed as demand recovers," he said.