Nuplex profits rise 3.6%
Chemical and resins maker Nuplex has beaten earnings forecasts slightly in its full year result, where net profit rose 3.6% or $2.3 million to $66.5 million.
Ebitda, at $130.9 million, are $8 million lower than last year’s record earnings, but slightly ahead of the $125 - $129 million range indicated when the company downgraded forecasts and restructured its senior management team in May.
Net profit for the year to June 30 was expected to be between $62 million and $65 million.
Shares in Nuplex on the NZX have risen 21c to $2.58 following release of the result this morning, having fetched between $2.33 and $3.39 this year.
Nuplex’s Sydney-based chief executive Emery Severin said earnings were similar to last year’s record result despite rapidly rising raw material costs, which increased by 13% on average, and a higher New Zealand dollar that wiped 4% from ebitda.
More than 90% of higher raw material costs had been recovered by bumping up the price of resins, sales of which rose 8.8% to $1,273 million.
“We continue to work on recovering the remaining cost lag in the new financial year,” Mr Severin said in a statement to the NZX.
Although volatility in financial markets made economic activity unclear, the everyday nature of Nuplex resins and composites - synthetic compounds used in paints, printing inks and adhesives - and the spread of operations across many markets meant the company had a “sound position” from which to operate.
Challenges in the home market of Australasia remained where strong Australian and New Zealand dollars, greater competition from imports and weaker manufacturing activity were pressuring margins.
Australasian earnings fell $10.4 million or 34% to $A19.9 million as consumer spending remained weak and there were fewer infrastructure projects in the 2010 financial year.
Restructuring of the Australasian business ordered earlier this year, to rationalise three composite brands into one, would better align the cost base with revenue opportunities and see the company focussed on pursuing growth in South East Asia, Mr Severin said.
Expansion projects in Vietnam and China were expected to double Nuplex's Asian resins capacity in the next three years and the company was still on the hunt for a new sit in Southern China was still being sought.
European sales grew $47.5 million to $E228.5 million as volumes returned to pre-GFC levels and raw material prices recovered.
Although sales grew in America, by $US 20.2 million to $US108.2 million, they had not yet returned to levels seen before 2008.
“Looking around the world, in Europe we are predominantly exposed to the better performing northern European economies, whilst in the US our resins go into consumer durables,” Mr Severin said.
“In Asia, we are more focussed on domestic end-use markets than export-related manufacturing, whilst in Australia and New Zealand, we are exposed to a diverse mix of industries.”
Mr Severin said the balance sheet remained strong and flexible and a gearing ratio of 11.7% meant the company was "well placed to undertake strategic, value creating M&A activity if such opportunities arise".
Nuplex settled its dispute with the Securities Commission during the year at a cost of $1.5 million, with an impact of $229 thousand on the full-year result.
A final dividend of 11 cents a share will be paid on October 7 bringing the full-year dividend to 21 cents a share. New Zealand shareholders will have to pay tax on the dividend while Australian-based shareholders continue to enjoy full imputation.
Nuplex financial results for the 12 months to June 30
Sales revenue: $1, 575 ($1,459.9)
EBITDA: $130.9 ($139.4)
Net profit: $66.5 ($64.2)