Nuplex operating profit up 42%

28 Aug '08

5 min read

Penetration into non-traditional market segments and a significantly lower cost base enabled the Specialties business to offset the downturn sustained by the Resins business in the region.

Financial Position
Net debt as a percentage of total tangible assets remained constant at 42% for the year. Net debt as a percentage of total funds employed decreased from 53% to 52.1%.

Cash flow
Operating cash flows improved to $75.4 million from $14.2 million (pcp), reflecting better operating results. Inventory was held at last year's levels, but trade receivables and payables increased reflecting higher pricing and longer terms.

Capital expenditure was $36 million with 65% spent on capacity increases and operational efficiencies in plants throughout the Group. A substantial uplift in capacity for environmentally
compliant products was achieved.

The planned sale of the Seven Hills (Sydney) and Avondale (Auckland) properties awaits completion of remediation and has been slowed by the downturn in the commercial real estate
market.

Outlook
John Hirst said: “The resins business' performance is expected to benefit from demand for environmentally-friendly technology and increased manufacturing capacity in Europe and the US. We also expect positive contributions from group efficiency programs to increase capacity and lower costs, and from expansion of composites resin capacity in Australia to bring in-house product currently manufactured by a third party, materially lowering operating costs.

“Prospects for the continuing turnaround of the Specialties business remain high. New agencies have broadened both Nuplex's product offering and target market, and several significant development projects are nearing completion. The business also has potential for regional expansion.

“Risks to earnings in 2008/09 are increases in raw material costs and the impact of inflation and higher interest rates on consumer confidence and demand. “Nonetheless, we are confident that the investment Nuplex has made in people, plant & technology will provide the platform for continuing organic and acquisitive growth.”

Nuplex Industries Limited is a leading international manufacturer and distributor of resins for coatings and composites, and specialty products for the construction, chemical, plastic and life sciences industries. It has manufacturing operations in ten countries on four continents.
Australia generates the largest share of earnings followed by Europe.

The company also enjoys significant contributions from New Zealand, Asia & the Americas. Nuplex is listed on the Australian and New Zealand exchanges and has a market capitalisation of A$410 million (NZ$500 million).

Nuplex Industries Limited