Nuplex tips future dividends will be partially imputed, flags earnings rise
BUSINESSDESK: Specialty chemicals company Nuplex Industries is hopeful it will be able to partially impute dividends in the future as its New Zealand unit reports a profit after cutting costs and reducing debt, while forecasting increased earnings for 2013 on its cost-cutting measures.
The company is forecasting an annual profit before interest, tax, depreciation and amortisation of between $135 million and $150 million. This compares to $131 million in 2012.
Chairman Rob Aitken told shareholders at the annual meeting in Auckland today that the company was a high-yielding stock but its dividends carried no tax credits for New Zealand and Australian shareholders. The stock has a gross dividend yield of 6.954%, according to NZX data.
The company paid no tax in New Zealand in recent years so had no credits to distribute. During 2012, after a debt revision and corporate allocation, Nuplex NZ reported a small taxable profit, he said.
"Looking ahead, we anticipate that Nuplex should be able to partially impute its dividends."
Imputation means a shareholder gets a credit on their dividend for tax paid by the company, effectively meaning investors do not get taxed for money the company has already paid tax on.
Nuplex would generate profits in New Zealand in future after it redeemed capital notes and reducing funding costs, and after announcing a range of cost-cutting moves.
The shares fell 1.3% to $2.98 in trading today and have climbed 33% this year.
Shareholders were told that the NuLEAP restructuring programme was on track to deliver its target of at least a cumulative $30 million in benefits by the end of the 2013 financial year.
"The board is confident that the group is on track to deliver improving returns to shareholders," Mr Aitken says.
Chief executive Emery Severin told the meeting that trading conditions in the first quarter of the latest financial year were a continuation of those experienced in the second half of the 2012 year.
In the first quarter, trading in New Zealand was slightly improved, was steady in Asia, lower in Australia and the US was flat.
The company is closely monitoring conditions in Europe, where tis first quarter volumes were steady compared to last year.
The company would save $2 million in this financial year from opportunities to save money in its procurement programme.