Synthomer FY2025: Margin Improvement and Strong Cash Flow Amid Challenging Markets

Synthomer FY2025 results: better margins and cash flow, but demand is still soft

Synthomer’s 2025 results are a bit of a mixed bag, but the important bit is this: the company is getting better at controlling what it can control. Revenue fell, profits are still under pressure, and losses remain ugly on both an underlying and statutory basis. But margins improved, free cash flow turned positive, debt came down, and the banks have given the group more breathing room.

That matters because this is a business still working its way through a tough chemicals cycle. Demand is patchy, tariffs have disrupted customers, and some of Synthomer’s end markets remain weak. Even so, management has clearly made progress on costs, portfolio clean-up and cash discipline.

Key numbers from Synthomer’s 2025 full-year results

Metric	FY 2025	FY 2024	Change
Revenue	£1,739.2 million	£1,933.1 million	(10.0)%
EBITDA	£136.5 million	£143.1 million	(4.6)%
EBITDA margin	7.8%	7.4%	+40bps
Underlying operating profit	£37.6 million	£48.1 million	(21.8)%
Statutory operating loss	£50.2 million	£26.2 million	Worse
Free cash flow	£56.6 million	£(54.7) million	Improved
Net debt	£575.0 million	£597.0 million	Lower
Underlying EPS	(37.2)p	(2.5)p	Worse
Basic EPS	(96.0)p	(44.4)p	Worse

Revenue down 10%, but Synthomer squeezed out better margins

The headline negative is obvious enough. Revenue from continuing operations dropped to £1,739.2 million, with volumes down 7.2%. Management blamed lower end-market demand following global tariff changes, plus ongoing weakness in parts of the chemicals market.

But the more encouraging piece is that EBITDA only fell 4.6%, much less than revenue. That tells you margin held up better than sales, helped by mix, cost savings and a push towards more specialised products. Gross margin improved by 200 basis points and EBITDA margin rose to 7.8% from 7.4%.

In plain English, Synthomer sold less stuff, but made slightly better money on what it did sell. In a downturn, that is exactly what you want to see.

Adhesive Solutions was the star performer in FY2025

The standout division was Adhesive Solutions. Revenue slipped only 1.5% at constant currency, but EBITDA surged 39.5% to £66.0 million and the EBITDA margin jumped to 11.6% from 8.1%.

That is a serious improvement. Management says the division is regaining share, improving reliability and benefiting from cost actions. It delivered around £11 million of benefits in 2025 and the longer-running improvement plan has now produced around £35 million of cumulative gains.

By contrast, Coatings & Construction Solutions and Health & Protection and Performance Materials both had a much harder year. CCS EBITDA fell 25.1% to £64.3 million, while HPPM EBITDA fell 28.5% on a constant currency basis to £24.2 million. HPPM also slipped into an underlying operating loss of £2.1 million.

So, there is no point pretending this was a broad-based recovery. It was not. Synthomer is still relying heavily on one division to do the heavy lifting.

Free cash flow, lower net debt and refinancing are the big financial positives

This is where the results get more interesting for investors. Free cash flow – the cash left after operating and capital spending movements – came in at £56.6 million, compared with an outflow of £54.7 million in 2024. That is a big swing in the right direction.

Net debt fell to £575.0 million from £597.0 million at the end of 2024, and down from £638.3 million at the half year. The covenant net debt to EBITDA ratio was 4.7x, inside the previous limit of less than 5.25x. That is still high, but at least it is under control for now.

The really important development is the refinancing. Synthomer has refinanced its key bank facilities to February 2029, extending maturities and resetting covenant tests. That removes a near-term funding overhang, which had been one of the market’s biggest worries.

There is a trade-off, though. The refinancing comes with a security and guarantee package, a minimum liquidity covenant, and expected net financing costs of around £70 million in 2026. Lenders may also take some fees in shares, although the company expects any new shares issued from that to be less than 0.7% of current share capital.

My view: this is not a victory lap, but it is a meaningful de-risking. When a leveraged company buys itself time, that matters.

Why the statutory loss still looks grim

Despite the better cash story, the income statement is still rough. Synthomer reported a statutory loss before tax of £120.2 million and a statutory operating loss of £50.2 million.

A big reason is Special Items, which totalled £87.8 million in continuing operations. These included £44.4 million of amortisation of acquired intangibles, £14.0 million of restructuring and site closure costs, and a £22.5 million impairment charge. There was also a £3.2 million pension past service cost.

Some investors will shrug off those items as non-core. Fair enough, but when restructuring, impairments and disposal costs show up year after year, they are not completely theoretical either. The core business is improving, but it is not yet healthy enough to make the losses irrelevant.

Synthomer strategy update: divestments, site reductions and specialisation

Management is sticking with its strategy from 2022. The group has now completed three non-core divestments since that review, including William Blythe in May 2025, and has four divestment projects underway.

It has also reduced its manufacturing footprint to 29 sites from 43, and now targets 25 or fewer. That should help simplify the group, reduce capital intensity and free up resources for higher-return specialist products.

There is a human cost here too. Synthomer said it removed around 250 roles in the second half of 2025. That is never great news, but it shows management is serious about cutting costs in a weak market.

Synthomer outlook for 2026: cautious wording, but with upside if trading holds

The company said Q1 2026 was in line with expectations and ahead of the prior year. CCS improved significantly, AS was stable, and HPPM had a slower start, though momentum improved through the quarter.

Management also said it expects a robust Q2 2026, helped by pricing power and higher shipping volumes following disruption after the start of the Iran conflict. It says risks are currently to the upside, although the longer-term effects remain uncertain.

That is a rare bit of optimism in a results statement, and investors will probably welcome it. Still, this is tied to a volatile geopolitical backdrop, so I would treat it as promising rather than bankable.

What Synthomer shareholders should watch next

• Whether free cash flow stays positive once the £50 million KLK receivables arrangement unwinds
• Progress on the four divestment processes
• Whether Adhesive Solutions can keep carrying group performance
• Signs of real recovery in Health & Protection margins and volumes
• Debt reduction towards the medium-term target of 1-2x net debt to EBITDA

My verdict on Synthomer’s FY2025 results

I’d call this a credible set of results rather than a clean recovery. The positives are real: better margins, strong cash delivery, lower net debt and a refinancing that pushes out risk. Those are not small things.

But the negatives are real too: revenue is down sharply, volumes are weak, EPS is deeply negative, and two out of three divisions had a poor year. Dividends also remain suspended until net debt is less than 2.5x EBITDA.

So the investment case still rests on execution. If management keeps improving margins, sells more non-core assets and gets some end-market recovery, there is room for a meaningful rebound. If not, this remains a highly geared turnaround story rather than a comfortable compounder.