Half Year 2026 Synthomer PLC Earnings Call Transcript
Key Points
- Revenue grew 5% in constant currency, with EBITDA up 13% and EBIT up 36% in H1 2026.
- EBITDA margin improved by 80 basis points to 10.1%, with gross margin expansion of nearly 200 basis points.
- All three divisions achieved volume and revenue growth, with strong regional performance in China, the US, and the Middle East.
- Innovative product developments in intumescent coatings for data centers, onshore oil and gas drilling additives, and medical adhesives are driving growth.
- Successful debt refinancing in April 2026 provides a stable financial platform and runway for strategic transformation.
- Divestment of acrylate monomers and three further divestment projects underway are expected to reduce net debt and enhance specialty focus.
- Full-year 2026 outlook upgraded, with expectations of improved free cash flow and faster deleveraging to 4-4.35x leverage by year-end.
- CCS division saw EBITDA increase by 33% to £46 million, with margin expansion of 220 basis points to 11.5%.
- Adhesive Solutions division achieved £40 million in cumulative transformation benefits, with EBITDA margin up to 12.1% from 5.4% three years ago.
- Health and Protection business capitalized on market disruptions, with volumes up 13.5% year-on-year.
- Market environment remains complex and uncertain, with geopolitical disruptions and raw material price volatility.
- One-off gains from Q2 market disruptions (approximately £6 million) are not expected to recur in H2.
- Adhesive Solutions faced intermittent reliability issues at Texas and Netherlands facilities, costing around €10 million in gross margin.
- Net debt remains high at £671 million, with covenant leverage at 4.9x, though expected to reduce.
- H1 net working capital outflow was higher than last year at £90 million due to increased raw material prices.
- Finance costs increased by £5.3 million in H1 due to higher debt levels and interest rates.
- Performance materials volumes fell by 5% year-on-year due to weaker demand in foam and specialty vinyl polymers.
- The company faces ongoing cost headwinds from wage inflation and bonus normalization.
- Divestment processes are taking longer than expected due to complex due diligence, with proceeds of £150-200 million not yet realized.
- The company does not forecast the Q2 activity uplift in base chemicals to continue into H2, limiting growth momentum.
Good morning and welcome to our 2026 first half results presentation. I'm here with Ian Torrance, who joined us in May as interim CFO and who some of you will already know, and Faisal Taba, Head of Investor Relations, and together we look forward to answering your questions at the end.
In terms of the agenda, I will provide an overview of our strong performance and the further strategic progress we made in the first half.
Ian will then walk through the numbers in more detail before I come back to present the strategic actions we have been taking in line with our sustained efforts to become a more specialty focused business.
Then at the end, we will discuss what we expect for the remainder of the year.
So let me begin with the highlights and the five headline points that frame our first half performance and the strategic context in which it was delivered.
Against the backdrop of a market environment which remained complex to navigate, we delivered the first half performance that was
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