Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Nuplex posts flat 1H profit, warns on full year earnings

Nuplex posts flat 1H profit, warns full year earnings will be at lower end of range as ANZ weighs

By Tina Morrison

Feb. 20 (BusinessDesk) – Nuplex Industries, the specialty chemicals maker, failed to increase first half profit and warned full-year earnings will be at the lower end of its forecast range as it cuts management jobs at its underperforming Australian and New Zealand units.

Net profit was $12.59 million in the six months ended Dec. 31, from $12.62 million in the year earlier period, the Auckland-based company said in a statement. Full-year earnings before interest, tax, depreciation and amortisation will be at the lower end of its $130 million to $145 million range, from $126 million the year earlier, it said.

Nuplex expects to accrue costs of $2.4 million in the second half of its financial year to reorganise its Australian and New Zealand units where weakness is weighing on growth in the Asia, America, Europe, Middle East and Africa regions. In the first half, sales from its main resins business in Australasia fell 20 percent pushing earnings from the region down 25 percent.

“It’s disappointing that earnings have remained flat over the past three years, particularly since we have invested significantly in growth via acquisitions,” said chief executive Emery Severin. “The continued structural decline of the ANZ markets and together with the strengthening of the New Zealand dollar against most of our trading currencies over the past four years has been the overwhelming cause of Nuplex’s flat earnings.”

Shares in Nuplex fell 3.7 percent to a six-week low of $3.35, making the stock the worst performer on New Zealand’s benchmark NZX 50 Index today.

Nuplex plans to reorganise the structure of its business in Australia and New Zealand into two “leaner” business units comprising resins and specialties and will cut 30 jobs, to improve returns, Severin said.

The change is expected to cost about $3.4 million this financial year and produce savings of about $1 million, he said. In the 2015 financial year the change should mean about $5.8 million of savings.

The streamlining of Nuplex’s manufacturing network, started in late 2012, remains on track to reduce capacity by 30 percent and realise $6.5 million in annualised cost savings in the 2016 financial year, the company said.

Its NuLeap cost cutting programme is forecast to deliver $15 million of savings a year, up from an earlier estimate of $12 million, the company said today.

Nuplex expects to deliver its 16 percent target return on funds employed within the two year period between the 2016 to 2018 financial years through improving profitability in Australia and New Zealand and growth in the rest of the world, Severin said. In the first half, it achieved an 11.2 percent return, up from 9.8 percent in the year earlier period.

In the first half, resin earnings rose 17 percent in Asia, 4 percent in Europe and 2.2 percent in the Americas, Nuplex said. It gets about 80 percent of sales from its resins business.

“The outlook for Asia, Europe and America remains positive for Nuplex,” Severin said.

Nuplex took a $14 million after-tax charge in the first half related to receivables and bank guarantees on its investment in the RPC Pipe Systems Fibrelogic joint venture, citing weaker business conditions ahead of plans to sell its interest to its partner before June 30. Total one-time charges in the latest half of $14.6 million compare with $13 million in charges the year earlier period.

First-half profit before one-time items of $26 million was lower than First NZ Capital’s estimate of $27 million and compares with $24.5 million in the year earlier period.

Nuplex will pay an unchanged 10 cents a share dividend on April 3.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

New Paper: Ninety-Day Trial Period Has No Impact On Firms' Hiring

The introduction of a 90-day trial period has had no impact on hiring by New Zealand companies although they are now in widespread use, according to researchers at Motu Economic and Public Policy Research. More>>

ALSO:

Corrections: Serco Exits Equity Stake, Remains As Operator

Serco has sold its equity stake in the company that holds the contract to design, build and run Wiri Prison in South Auckland but continues as sub-contractor to operate the facility. More>>

GDP: NZ Economy Grows Faster-Than-Forecast 0.7%

New Zealand's economy grew at a faster pace than expected in the first quarter of 2016 as construction expanded at the quickest rate in two years. The kiwi dollar jumped after the data was released. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news