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Shares drop after London group lowers earnings forecast due to ‘deteriorating macroeconomic conditions’

London – Synthomer plc's nitrile butadiene rubber (NBR) latex operations has continued to be hit by the post-Covid decline in rubber gloves demand, the London group has announced.

At the time of its interim results in August, the group reported that inventory levels of medical gloves remained at high 'post-pandemic' levels.

Associated de-stocking, it said, significantly reduced NBR latex production volumes in the first half and delayed a return to pre-pandemic NBR growth.

In a trading update 29 Sept, Synthomer said the de-stocking continued in the third quarter with production volumes further reduced.

As a result, the Synthomer board anticipates “modest profitability” in the performance elastomers business for the second half of the year.

Synthomer went on to say that underlying end-customer demand for medical gloves remained similar to pre-Covid levels.

However, it added, the destocking impact is not expected to abate before the end of 2023.

The London group also noted that macroeconomic conditions had deteriorated since the announcement of its interim results in August.

This, it said, had led to reduced demand in construction and coatings end markets, impacting trading in Synthomer's European business.

As a result of these factors, Synthomer said the board now expects full-year earnings (EBITDA) to be 10% to 15% below its previous expectations.

Shares of the London-listed company fell 32% to £0.90 on 29 Sept following the forecast revision. On 12 Oct, shares in the group were trading at £0.89.