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Nuplex first-half profit slumps 23%

Nuplex Industries'  23% fall in first-half profit has been blamed on weaker resin sales here and across the Tasman, and the strong NZ dollar.

Net profits for the company fell $7 million to $24.1 million in the six months to December 31, from $31.1 million at the same time last year.

Total sales fell o $746 million from $761.5 million.

Nuplex shares fell 1% to $2.62 after the result was released, having climbed 15% this year with an ‘outperform’ rating based on the consensus of six analyst recommendations compiled by Reuters.

The company will end up paying a first-half dividend of 10 cents a share, to be paid on April 2, the same amount as last year.

Sales within Nuplex’s largest resins division fell 2.8% to $595.5 million. EBITDA fell 10.5% to $46.9 million.

"These results reflect the mixed trading conditions experienced in the different markets and regions of our global operations," Nuplex chief executive Emery Severin said in a statement.

"Across the Group, improved unit margins and lower operating costs were the result of our continued focus on margin management and the implementation of NuLEAP Initiatives. Additionally, we progressed those growth initiatives undertaken in the past year to place Nuplex in a stronger position for the medium term."

The Australasian region, the company’s biggest source of revenue, experienced the largest decline where sales dropped 9.7% to $215.8 million and earnings declined 32% to $11.3 million.

Sales for Europe, the Middle East and Africa climbed 1.2% to $184 million with earnings rising to $16.3 million by 11%, while sales in America rose 4.2% to $68.6 million with earnings rising by 2.4% to $6.5 million.

The company faced weaker demand from manufacturers and builders in Australia, and increased competition from imported products, which were assisted by a strong Australian dollar.

Steady demand for decorative resins and adhesives was found in New Zealand, though experts were hurt by the high Kiwi dollar.

Nuplex’s specialities division posted a 1.5% gain in revenue to $150.9 million, including a three-month contribution from Acquos, while EBITDA fell 18% to $10.4 million, with the EBITDA/sales margin falling to 6.9% from a previous 8.5%.