Nuplex shareholders showed their disappointment at the industrial chemical and resin maker's surprise restructuring news by wiping about $43 million off its market capitalisation yesterday.
Under the plan announced yesterday, Nuplex will shut four plants in New Zealand and Australia, while refurbishing four others in response to lower demand on both sides of the Tasman.
With the closures, the firm will shed almost a 10th of its 800-strong Australasian workforce.
Nuplex shares closed 6.9 per cent lower at $2.95 yesterday.
James Smalley, a client adviser at brokerage Hamilton Hindin Greene, said the correction looked a little overdone, particularly as most of the impact would be of a non-cash nature and positioned the company for earnings growth.
The costs include $3.95m for redundancy payments, $8.05m in obsolete equipment, provision for site cleanup and remediation of $4.35m, with the plant upgrades costing about $13m.
The firm will also reduce the carrying value of its RPC Pipe Systems joint venture by $5.6m.
"It does show the macroeconomic uncertainty at the moment and that the market is not in the mood to take nasty surprises lightly," Smalley said.
Nuplex's Australasian operations president, Sam Bastounas, said the move was not taken lightly but faced with declining demand from manufacturers and lacklustre construction activity, it was the only viable option that would allow it to keep production in New Zealand and Australia.
Last month, Nuplex posted a 2012 full-year net profit of $62.5m.
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