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Nuplex cuts earnings guidance a second time, cites ANZ margin squeeze, flat US result

Nuplex Industries [NZX: NPX] cut its full-year earnings guidance for a second time, saying competition across its Australia and New Zealand business has squeezed margins for both resins and specialty chemicals.

Earnings before interest, tax, depreciation and amortisation (ebitda) for the 12 months ending June 30 are now expected to be between $121 million and $125 million, compared with guidance issued four months ago for ebitda to fall within the lower end of a range of $130 million to $145 million.

The projection includes $2.4 million of net costs to reorganise its Australasian business and an estimated $2 million in foreign exchange losses.

Net profit would likely match 2013's result of $42.9 million, subject to accounting adjustments, the Auckland-based company said in a statement.

"As noted back in February, the outlook for Australia-New Zealand (ANZ) was challenging," said chief executive Emery Severin. "Since then, whilst volumes have been in line with internal forecasts, competitive pressures have impacted margins across the larger businesses."

The shares fell 4.8 percent to $3.20 and are down 1.2 percent this year. The stock is rated 'hold', based on the consensus of six analysts surveyed by Reuters.

The company's ANZ resins segment ebitda was expected to drop between 35 percent and 40 percent this year, while the ANZ specialties segment would record a decline of 45 percent to 50 percent, "primarily reflecting margin pressure in both segments," the company said.

The results would include a negative foreign exchange impact of about $2 million, reflecting a stronger kiwi dollar over the past five months, and accounting adjustments for re-organising the ANZ business of $2.1 million, it said.

Trading in Europe had exceeded the company's expectations and as a result, ebitda for Europe, Middle East and Africa is expected to rise between 15 percent and 20 percent in local currency terms. Asia had met expectations and will lift earnings between 10 percent and 15 percent, it said.

In the Americas, ebitda would be flat on a year earlier in local currency terms, reflecting a recent loss of tolling volumes, Nuplex said.

The company expects to hold its 2014 dividend payment in line with payments for 2013, it said.

Nuplex will release its full-year results on August 14.

(BusinessDesk)

Comments and questions
6

This company has announced earnings misses pretty much every year for the last few years. Management clearly has some issues that the board is not addressing.

They just got rid of the ANZ management a couple of months ago so they may now improve once they get settled......

Time for a Board clean out.
Mr Wine doesn't own that many shares these days and 20years is long enough...

some of the highest paid executives of a company on the NZX

Continuously poor governance and management? Time for heads to roll?

Managed by rabble who still feel that's it's ok to to drop head count while they fly first class and sip on expensive wines. Most of the high performers have been moved out. Clearly the top end needs a broom, starting with the CEO.

Poor board choices are signaling the end of this company, hold on to your money.