Unloved chemicals company Synthomer (LON:SYNT) delivered ‘strong growth’ in sales and EBITDA in the first five months of 2026. Long-suffering investors were relieved to hear Q2 margins and EBITDA growth exceeded management’s expectations.
Strong H1 trading and the benefits from self-help measures underpin the polymer group’s confidence in delivering ‘year-on-year progress’ in FY26.
What does Synthomer do?
London-headquartered Synthomer supplies highly specialised polymers and ingredients. These play vital roles in sectors such as coatings, construction, adhesives, and health and protection. These sectors are growing markets for customers who serve billions of end users worldwide.
In a positive AGM trading update, Synthomer called out improving trading momentum from the start of the year. This was driven by ‘targeted’ growth and cost savings The positive momentum was led by the Coatings & Construction Solutions (CCS) business, which supplies industrial coatings to data centres.
Performance pick-up
Synthomer’s trading performance accelerated across the group in April and May. The company pinned this on ‘substantial changes in our operating and commercial environment following the start of the Iran conflict, for which we are well positioned’.
More specifically, ‘significant increases’ in raw material and energy costs triggered by the conflict have been successfully passed through to customers.
Volumes in the Health & Protection business have also increased. The Health & Protection arm has benefited from the disruption to the global sourcing and distribution networks of Asia-based rivals. Other Synthomer customers have brought forward orders to build resilience in their own supply chains.
Sustainable earnings potential
CEO Michael Willome said: ‘The market environment remains uncertain and so our focus is on continuing to deliver our speciality strategy, including divestments, to strengthen our balance sheet and support further improvement in Synthomer’s sustainable earnings potential.’
Synthomer’s shares have shed over 95% of their value over the past five years. But the stock has rallied 80% year-to-date on recovery hopes.
The company is making progress with its transformation from a bulk materials supplier into a higher margin specialist monomer maker.
A recent bank debt refinancing has given it the financial headroom to fund further self-help measures and strategic investments. And the firm is selling non-core businesses to simplify its portfolio and bring down debt.
The recent divestment of its loss-making Acrylate Monomers business to German investment firm Mutares marked Synthomer’s exit from its final upstream base chemicals business. It also represented another step in its strategy of focusing on higher-value speciality chemicals.
Yet despite margin and net debt progress, Synthomer remained loss-making in 2025. And given the uncertain market backdrop, the shares are for risk-tolerant investors only at this stage.
Read the press release here: https://www.synthomer.com/investor-relations/
