Synthomer extends covenant waivers, shares slide
By Iain Gilbert
Date: Tuesday 05 Aug 2025
(Sharecast News) - Shares in chemicals business Synthomer were down double-digits early on Tuesday after an extension to its covenant relaxation period sparked fresh concerns over its debt levels and earnings outlook.
Synthomer said it had reached an agreement with its banking syndicate to extend covenant waivers through to the end of 2026. Under the revised terms, net debt-to-EBITDA thresholds will be raised significantly, allowing it more breathing room amid what it described as "weaker-than-expected trading conditions and ongoing geopolitical uncertainty".
Synthomer also said revenues had fallen 9.8% to £925.2m in the six months ended 30 June, with volumes down 7.1%, driven by volatile end-market demand following recent tariff changes.
However, underlying earnings rose 5.4% to £77.8m, with margins improving by 110 basis points to 8.4%, supported by £17m in cost savings and pricing discipline.
Synthomer said its adhesive solutions division delivered the strongest performance, with EBITDA up 65% and margins nearing 12%, while its health and protection division also saw gains, aided by higher-margin glove products and new income streams from a US technology partnership. Its coatings and construction arm saw mixed conditions, with energy solutions impacted by reduced oil and gas drilling activity.
The London-listed firm, which also said net debt rose from £560.6m to £638.3m, added that it continues to expect a H2 improvement in performance, supported by restructuring benefits and stabilising demand in key markets.
CEO Michael Willome said: "While our 'in region for region' manufacturing strategy means we face limited direct tariff impact, the ongoing uncertainties around the global trade environment create volatility in end-market demand. We continue to focus on managing our costs and our balance sheet to ensure we emerge from this turbulent period for our industry in a strong position."
As of 0840 BST, Synthomer shares had sunk 11.17% to 70p.
Reporting by Iain Gilbert at Sharecast.com
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