Europe and North America: Reported operating profit slightly down but 1.9% up on a constant currency basis, with higher volumes and cash margins firming from H2 2013 levels.
Asia and ROW: Despite good progress on volumes, performance continued to be impacted by the competitive environment among glove manufacturers which depressed margins in the nitrile business.
Strong cash generation reduced net debt to £114.6 million (FY 2013: £133.6 million).
Updated dividend policy: 2.5 times dividend cover effective 2014; interim dividend increased by 25% to 3.0 pence.
Commenting on the results, Adrian Whitfield, Chief Executive Officer, said:
"Against challenging market conditions, particularly in our Asian nitrile business, Synthomer has delivered a solid performance in the first half of 2014, with Group volumes up 1.8%.
In Europe and North America, we saw improvements in demand across most business segments, and encouragingly, cash margins have firmed from the levels seen towards the end of 2013. In Asia and ROW, whilst we saw good progress with volumes increasing by 4.9% during the half, margins in our nitrile business continued to be impacted by the strong competition between glove manufacturers as previously reported. However, we expect nitrile unit margins to firm in the second half.
Given the strong cash generative nature of our business, the Board has today updated the Group's dividend policy, increasing the level of cash returns for shareholders.
We expect the improved demand in Europe to continue through the remainder of the year. In Asia, we expect continued growth in nitrile demand, and some firming in nitrile cash margins. Together with the impact of currency, we expect full year underlying profit before tax to be broadly in line with the level achieved in 2013."
