Synthomer Reports Positive Cash Flow and Resilient Earnings in Challenging 2025 Market

Quick take: Synthomer’s 2025 trading update in numbers

Synthomer has delivered a steady set of full-year figures in a tough market. Revenue is down, but margins and cash flow moved the right way. Management leaned hard into cost savings and a shift towards higher-margin speciality products, and it shows.

• Revenue: c.£1.74bn (2024: £1.93bn)
• EBITDA (earnings before interest, tax, depreciation and amortisation): £135-138m (2024: £143.1m) – in line with market expectations
• Free cash flow: positive for the year (cash inflow in H2)
• Net debt: c.£575m at year end (H1 2025: £638.3m; FY 2024: £597.0m)
• Covenant net debt:EBITDA: 4.7-4.8x (requirement: less than 5.25x)

Metric	2025 (expected)	2024	Comment
Revenue	c.£1.74bn	£1.93bn	Lower end-market demand post global tariff changes
EBITDA	£135-138m	£143.1m	Resilient, with improved margin
Free cash flow	Positive	Not disclosed	Cash inflow in H2
Net debt	c.£575m	£597.0m	Improved vs H1 2025 (£638.3m)
Leverage (covenant net debt:EBITDA)	4.7-4.8x	Not disclosed	Below 5.25x covenant

Margins up despite lower revenue – the strategy is biting

Revenue fell after tariff-related turbulence dampened demand from early Q2, but Synthomer still lifted gross and EBITDA margins. That’s mainly down to two levers: reallocating capital towards higher-margin speciality solutions and expanding “self-help” cost reduction programmes (notably in Coatings & Construction Solutions and SG&A).

In plain English: they’re selling more of the better-margin stuff and trimming costs in the rest. That helped stabilise earnings at £135-138m of EBITDA despite a near £190m revenue drop year on year – a respectable outcome in the circumstances.

Divisional colour: adhesives improving, coatings mixed, gloves perking up, energy weak

• Adhesive Solutions (AS): Continued to regain market share and lift margins, supported by the Texas capacity investment. That investment case is starting to show through.
• Coatings & Construction Solutions (CCS): Mixed picture in H2. Coatings trended slightly better in Q4, offset by slightly weaker construction and consumer sub-segments. Energy solutions remained weak given low oil and gas drilling activity.
• Health & Protection: Volumes for the medical glove market improved in Q4 from both new and existing customers. Margins here remain substantially below pre-pandemic levels, so there’s recovery, but from a low base.

The divisional mix explains the Group margin grind: adhesives and speciality solutions are doing more of the heavy lifting while energy-linked products lag.

Cash, debt and the KLK receivables arrangement

Synthomer delivered positive free cash flow for 2025, with the expected H2 cash inflow. Year-end net debt is c.£575m, down from £638.3m at the half and modestly below the £597.0m reported at FY 2024. That movement reflects tighter profit and cash management and support from the recently announced £50m receivables arrangement with the largest shareholder, Kuala Lumpur Kepong Berhad Group.

On leverage, covenant net debt:EBITDA landed at 4.7-4.8x, comfortably within the less-than-5.25x requirement. Headroom is there, but not huge, so ongoing deleveraging matters. Management is pushing a broadened divestment pipeline following the sale of William Blythe in May 2025 to simplify the portfolio and reduce debt further.

What “self-help” and covenant leverage mean

Self-help actions are measures the company controls: cost reductions, product mix shifts, capital allocation, and operational improvements. These can support earnings even when markets are subdued. Covenant net debt:EBITDA is a lender test that compares debt to cash earnings; staying below the agreed threshold avoids a covenant breach and keeps financial flexibility intact.

2026 outlook: progress without banking on a big rebound

Management expects year-on-year progress in 2026 even without a significant market recovery. Drivers include full-year benefits from 2025 cost programmes, contributions from product investments in Adhesive Solutions, ongoing margin progress in speciality businesses, and volume improvement in Health & Protection. Offsets are clear too: wage inflation and the normalisation of bonus accrual.

In short, Synthomer is aiming for another year of margin and cash discipline while it waits for end-market demand to normalise. The CEO also reiterated the medium-term ambition to double recent earnings levels through self-help, volume recovery and delivery of the strategy.

Why this update matters for investors

This is a “quality of earnings” story. Revenues fell, yet margins rose and cash came in. That supports the case that the portfolio shift to speciality solutions and the expanded cost savings are working. Positive free cash flow, lower net debt versus mid-year, and leverage within covenant all point to a tighter, more resilient operating model.

Risks remain. End markets are still subdued, with energy solutions particularly soft and Health & Protection margins substantially below pre-pandemic levels. Leverage at 4.7-4.8x is controlled but elevated, so the divestment programme and continued cash generation remain important to de-risk the balance sheet.

On balance, I’d call this update cautiously positive. Synthomer has executed well on what it can control, protected margins, and generated cash in a difficult year marked by tariff-related disruption. If the 2026 self-help benefits land as planned and end-market demand improves even modestly, there’s room for earnings to grind higher and leverage to edge down.

Key dates and disclosures to note

• All figures in this update are preliminary and unaudited.
• Final results for the twelve months to 31 December 2025 are planned for late March 2026.
• Covenant requirement: net debt:EBITDA less than 5.25x; Synthomer reported 4.7-4.8x at year end.
• Divestment progress continued in 2025 with the sale of William Blythe; a broadened pipeline is ongoing.

My bottom line

Lower sales, better margins, positive cash and contained leverage – that’s a decent outcome in 2025’s backdrop. The strategy to tilt towards speciality polymers and cut costs is delivering. The next leg is about execution on divestments, continued cash control, and any tailwind from market normalisation. If those ingredients hold, Synthomer looks set to make the incremental progress it’s guiding for in 2026.