(investorschronicle) -- Yule Catto, a historic British chemicals company presented a mixed picture with its half-year results, with a hefty dividend hike having been accompanied by eurozone-related pressures, over-capacity worries and aggressive competition in Asia. Despite this, management stuck to its guidance of full-year pre-tax profit of GBR96m, with cost savings helping the performance - savings should boost operating profit by GBR16m this year and by GBR6m in 2013. While, after sliding heavily since March, the shares are now looking too cheaply rated.
The nitrile latex business came under particular pressure with tough Asian markets pushing profits at the Asia and rest of the world unit down 42 per cent to GBR11m, on sales that dropped 11 per cent to GBR165m. Market share was mostly unaffected, though, and Yule Catto controls 30 per cent of the global nitrile market. Meanwhile, sales in the US and Europe were hit by eurozone worries, which helped volumes to slide 11.5 per cent, with sales down 9 per cent to GBR438m. However, cost-savings from the PolymerLatex acquisition, which made a similar range of rubber-based products to Yule Catto, boosted divisional operating profits by 22 per cent to GBR55.7m.
Yule Catto business is built around a comprehensive range of emulsion polymer dispersions and lattices based on vinyl acetate homo and co-polymers, pure and styrene acrylics, styrene and nitrile butadiene. In addition, Yule Catto produces a range of low hydrolysis polyvinyl alcohol materials and a range of speciality products based on poly vinyl acetate. In Asia, we are also active in the manufacture of natural rubber dispersion and alkyd and polyester resins.
MRC