Nuplex interim profit hit by writedowns

20:42, Feb 20 2013

Chemical-maker Nuplex Industries' first-half profit has more than halved to $11.5 million, after it booked the writedowns and costs from its Australasian restructure.

Nuplex, which supplies resins to the paint, ink, adhesives and plastics industries, has continued to suffer from the high New Zealand dollar and weak demand for its products on both sides of the Tasman.

It said in September it would shut its plant in Onehunga, Auckland, as well as two plants in Australia, to reflect the drop in demand, and refurbish other plants including its one in Penrose, Auckland.

Writedowns of obsolete equipment as a result of that restructure were largely responsible for the $13.1m "significant items" bite out of its profit.

Net profit before those items was $24.5m, down 10 per cent year-on-year.

Earnings before interest, tax, depreciation and amortisation was $57.6m, in line with the previous first half.

That included an $11m contribution from its acquisitions of German resin maker Viverso and Australian plastics pigments and additives business Nuplex Masterbatch.

It also reflected $6m in costs relating to the restructure and a procurement initiative, and a $2.1m blow due to the impact of the higher New Zealand dollar.

Nuplex declared an interim dividend of 10 cents per share, in line with the same time last year.

The restructure is expected to deliver cost savings of $500,000 in the second half, and $3.7m of savings next financial year. Once completed it will deliver annualised cost savings of $5.6m.

Chief executive Emery Severin said it had been a challenging six months, due to extremely weak conditions in Australia - its largest market - and demand in Europe being more volatile than expected.

Sales were up 11 per cent to $828.7m.

"Volumes from our existing operations were up slightly as growth in Asia and the Americas offset the impact of lower volumes in Australia and New Zealand and steady volumes in Europe," he said.

The company has forecast that full-year Ebitda will now fall between $135m and $140m - it had previously forecast that range to be $135m to $150m.

Severin said the narrowing of its guidance reflected the ongoing strength of the kiwi dollar, the continued impact of soft-trading in Australia in the first-half, and an earlier than usual end-of-year slowdown in Europe.

"Keeping our focus on what we can control remains key to navigating the ongoing challenging business environment," he said.

"We are continuing to execute our strategy focused on improving returns on funds employed by pursuing operational excellence and building market leading positions.

"We continue to focus on margin management, tight cost control and pursuing operational improvement to maximise earnings and cash generation irrespective of the business cycle."

Nuplex shares last traded on the NZX at $3.47, up 32 per cent on this time last year.