Synthomer’s 2025 resilience and why the 2026 refinancing path matters
Synthomer has reconfirmed solid 2025 numbers and says 2026 has started to plan, with momentum building. The headline is straightforward: cash generation was positive, margins improved, and earnings held up despite softer demand after global tariff changes. The focus now shifts to refinancing and asset sales – and crucially, the Board says it does not currently intend to issue new equity.
For investors, this is a de-risking story in two acts: operational self-help to defend profitability and cash, and a constructive refinancing to manage maturities due in H2 2027.
Key figures from the trading and refinancing update
| Metric | Detail |
|---|---|
| Continuing revenue (2025) | c.£1.74bn |
| Continuing EBITDA (2025) | £135-138m |
| EBITDA margin (2025) | Increased year-on-year (exact % not disclosed) |
| Free Cash Flow (2025) | Positive (amount not disclosed) |
| Covenant net debt:EBITDA (31 Dec 2025) | 4.7-4.8x |
| Covenant limit | Less than 5.25x |
| Liquidity (cash + undrawn committed facilities) | £385m |
| Debt facilities maturities | Revolving credit and UK Export Finance facilities due H2 2027 |
| 2026 trading | In line with prior year; momentum building |
| 2025 results timing | Late April 2026 |
How Synthomer defended margins and cash in 2025
Management calls out “self-help” measures – in plain English, internal cost reductions and operational execution – as the lever that offset softer demand after tariff changes. That helped lift EBITDA margin and keep Free Cash Flow positive.
Jargon buster: EBITDA is earnings before interest, tax, depreciation and amortisation – a proxy for operating cash generation. Free Cash Flow is the cash left after operating costs and capital spending. The update confirms direction (up on margins, positive FCF), but the exact amounts are not disclosed.
The covenant net debt:EBITDA ratio at 4.7-4.8x sits inside the 5.25x requirement, giving headroom. Liquidity of £385m provides a decent buffer while the refinancing and divestment programme progress.
2026 trading snapshot: passing through costs, volumes improving
Since January, trading is in line with expectations and momentum is “building”. Two operational points matter here:
- Input inflation: The company is passing through significant increases in raw materials and energy costs since the start of the military action in Iran via pricing adjustments.
- Volumes: Sales volumes are increasing in several product areas, supported by Synthomer’s regional manufacturing footprint.
The Middle East joint venture and sales office are operating as usual, and global supply chains have stayed robust to date. That continuity is positive, though the company is rightly monitoring the situation closely. If the cost pass-through sticks while volumes tick up, margin momentum can continue into 2026.
Refinancing update: constructive talks, no equity raise planned
The core financing task is clear: amend key covenants and extend the maturities of the revolving credit facility (an on-demand bank line) and UK Export Finance-backed debt, both due in H2 2027. Discussions with lenders are described as constructive.
Two investor-friendly signals stand out:
- No new equity: The Board does not currently intend to issue new equity. That reduces dilution risk.
- Asset disposals: A broadened divestment programme is running alongside the refinancing to help reduce leverage.
Kuala Lumpur Kepong Berhad Group (KLK), the largest shareholder, remains “very supportive” of the strategy and delivery. Supportive anchors matter when negotiating with lenders and pursuing disposals.
What this means for the investment case
Positives I see
- Resilient 2025: Earnings at £135-138m EBITDA and positive cash generation, with a higher margin despite weaker demand, suggest the self-help plan is working.
- Headroom and liquidity: Covenant ratio within limits and £385m of liquidity buys time to execute the plan.
- Early 2026 momentum: Volumes firming and cost pass-through taking effect support near-term earnings stability.
- Refinancing stance: Constructive lender dialogue, no current intention to issue equity, and a live divestment programme aim to manage leverage without dilution.
Risks to keep in mind
- Macro and geopolitics: The consequences of the military action in Iran are uncertain. Further energy and raw material volatility could test pricing power.
- Refinancing terms: Extending maturities and amending covenants is the goal, but pricing and conditions are unknown. Tighter terms could cap flexibility.
- Execution on disposals: Proceeds, timing and EBITDA leakage from any sale are not disclosed. Deal quality will drive leverage outcomes.
- Demand backdrop: The RNS notes softer end-market demand after tariff changes. A sustained recovery is not assumed and remains to be proven in 2026.
About the platform: diversified, specialty-focused
Synthomer describes itself as a leading supplier of high-performance, highly specialised polymers across coatings, construction, adhesives, and health and protection. It operates 29 manufacturing sites and five innovation centres across Europe, North America, the Middle East and Asia, serving more than 6,000 customers with c.3,800 employees.
The update highlights c.£1.7bn of continuing revenue in 2025 and notes growing end markets underpinned by urbanisation, demographic change, climate and sustainability trends. Decarbonisation targets have been approved by the Science Based Targets initiative, and the company holds the London Stock Exchange Green Economy Mark. These points reinforce the “speciality chemicals” positioning that lenders and buyers of any divested assets will care about.
What to watch next
- Late April 2026 results: Look for precise cash flow, capex, working capital and net debt figures, plus a quantified margin bridge from 2024 to 2025.
- Refinancing milestones: Any RNS on amended covenants, extended maturities, or pricing of facilities due in H2 2027.
- Divestment progress: Deal announcements, expected proceeds, and impacts on EBITDA and leverage.
- Trading run-rate into Q2: Evidence that price increases are sticking and volumes continue to improve.
My take
This is a tidy update. The company did what it needed to do in 2025 – protect margin, keep cash positive, maintain covenant headroom – and it has started 2026 on the front foot. The absence of a planned equity raise is a clear positive for existing holders, but it puts more emphasis on getting good refinancing terms and executing disposals at sensible valuations.
If Synthomer lands the refinancing and makes progress on divestments, leverage risk fades and the operational improvement can show through more clearly in 2026. If terms are tougher or the macro backdrop worsens, the path tightens. For now, it is a constructive trajectory with the right levers in motion – and a near-term catalyst coming with the late April results.
