Acquisition Engine For Decade Of Nuplex Growth

European Acquisition Engine For Decade Of Nuplex Growth

Statement based on the addresses of the Chairman, Mr Fred Holland, and Managing Director,
Mr John Hirst, at the annual meeting of Nuplex Industries Limited in Auckland today

Nuplex is forecasting its acquisition target Akzo Nobel Coating Resins will be the “engine” that will drive the Company’s growth over the next decade and lead to the payment of higher dividends.

At today’s annual meeting in Auckland, shareholders were told the Coating Resins business is “currently profitable, and is forecast to be more profitable in the future”.

Managing Director John Hirst said this would add to the Company’s ability to pay a higher dividend in the first full year of ownership.

Even excluding the acquisition target, Nuplex is forecasting to increase after tax operating profit from historical Nuplex businesses into the $30 million to $32 million range, an increase of between 6% and 13%, over last year’s financial performance.

Mr Hirst said that after the first quarter’s trading all divisions are “at or ahead of last year’s performance” in what is shaping as a “challenging year” as the Company meets substantial increases in raw materials, driven by high oil prices and petrochemical shortages.

These increases were being managed through a combination of price rises, tight control over operating costs and maintaining sales at high volumes.

He also estimated the current strength of the New Zealand dollar compared to what it was last year will trim $3.7 million off the Company’s earnings before interest, tax, depreciation and amortization ( EBITDA ) result.

Mr Hirst described the Nuplex operations in New Zealand, Australia and Asia as being a “victim of our success” through achieving significant market share in most sectors of our principal markets, leaving little room for growth of our current business.

“We needed to find an avenue for business expansion if we were to increase shareholder wealth,” and he saw Akzo Nobel Coating Resins assisting in this. It gives the Company access to innovative technology and intellectual property that will enable Nuplex to take a leadership role and differentiate itself in what are highly functional, technical products.

“We expect to see a flow of technology from Coating Resins to Nuplex and from Nuplex to Coating Resins.

“It is this two way flow of technology that will deliver improved Company performance rather than synergy benefits through consolidation.”

Once Coating Resins is integrated, Australia will generate 39% of total Company sales (compared to 74% in the last financial year). It will remain Nuplex’s largest market in revenue terms.

More than 85% of the Company’s future sales, estimated to be in excess of $1 billion, will be outside New Zealand.

The Chairman, Mr Fred Holland said that the acquisition would reposition Nuplex as a trans national or global company.

“The key drivers behind our growth have been a determination to grow shareholder wealth and an imperative to have the financial strength, size, diversity and presence to be amongst the leaders in the markets in which we operate.”

He said it was the “foundation” of year in, year out sound financial performance that enabled Nuplex to take the “audacious” step of buying a business with a turnover of $465 million, an EBITDA in excess of $30 million an employee base of more than 750 people and facilities in eight American, European and Asian countries.

At the meeting shareholders approved proposals to increase directors’ fees and a long term incentive plan for management.

The Company will hold an extraordinary general meting on November 23 to consider to Akzo Noble Coating Resins acquisition.

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