Nuplex operating profit up 42%

28 Aug '08

5 min read

Nuplex Industries Limited, the leading manufacturer & marketer of specialty resins and chemicals, announced an operating profit for the year ended 30 June 2008 of NZ$53.4 million, 42% above the previous corresponding period (pcp).

Net profit after tax increased 84% to $48.3 million after unusual items related to remediation ($1.1 million) and impairment ($4.0 million). Earnings per share increased by 82%. Revenue grew 6% to $1,532 million.

Directors have increased the final dividend to 23 cents per share, payable on 17 October 2008 to shareholders on the register at 3 October 2008. This will bring total dividends for the year to 43 cents per share, up 19%, representing 66% of full year operating profit.

The dividend will be fully franked for Australian shareholders. It will not carry any New Zealand imputation credits and as a consequence overseas resident shareholders will not receive a supplementary dividend. The dividend reinvestment plan will apply to the final dividend, with a discount of 30 cps from the strike price.

Mr John Hirst, group managing director, said: “We are very pleased to be able to report significantly stronger performance for a year when the international economy was challenging and we have had to face a considerable increase in costs driven by a higher oil price.

“This result reflects improved productivity after significant restructuring, with new capacity in Europe and the closure of loss-making plants in Brazil and the UK. Demand increased in Asia and there was a positive contribution from the successful G-Cure acquisition in the US.”

The Resins business' result included an adverse foreign currency movement of $1.9 million. On a constant currency basis, EBITDA improved by 13%. A substantial uplift in earnings came from restructuring the business, which provides raw material inputs for the global coating and regional composites, construction, adhesive, textile, printing ink and paper industries.

The European business was the stand-out performer. It grew sales volumes through advanced technology and new and more efficient capacity, and also benefited from restructuring and improved sales quality. Soft demand from the New Zealand coatings market, a slowdown in discretionary spending in Australia and margin pressure across Australasia generally created a difficult business environment.

While US markets continued to weaken, the positive impacts of the G-Cure acquisition and the closure of the loss-making Brazil manufacturing plant contributed to an improved year-on-year result from the Americas. Asia maintained steady growth, with China's performance particularly pleasing.

Nuplex's Specialties Products business markets functional technical raw materials to the Australasian chemical, plastic, construction, coatings and life sciences sectors.

Strong performance continued following closure of the Seven Hills manufacturing site, exit of non-performing business units and rationalisation of the business portfolio. Lower demand from traditional market segments, particularly in New Zealand, was more than offset by opportunities provided by new agencies and success with a number of longer-term development projects.