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

 


Nuplex cut to ‘hold’ at Craigs on Australia downturn

Nuplex cut to ‘hold’ at Craigs on steeper-than-expected Australian manufacturing downturn

By Suze Metherell

March 26 (BusinessDesk) – Nuplex Industries was winded by a steeper-than-expected cyclical downturn in Australia’s manufacturing sector, says Craigs Investment Partners, which cut the specialty chemicals manufacturer to ‘hold’ from ‘buy’ following its first-half results.

The market in Australia and New Zealand has undergone “a structural change” since 2010, as Nuplex’s high margin customers, in packaging adhesives, textiles and inks, reduce production in response to a manufacturing that’s trimming local output in favour of importing finished goods, Craigs analyst Dennis Lee said in a report.

He said there was a risk of “further escalation in restructuring costs if more drastic changes are necessary to contain Australia and New Zealand earnings leakage.”

“The cyclical downturn particularly in Australia was steeper than expected and this has accelerated the speed of structural reform in the manufacturing sector,” Lee said in the note titled “First-half 2014 post-result review – Australia still a drag”.

First-half earnings for the Auckland-based company showed sales from its main resins business in Australia fell 20 percent. Sales in Australia have been further crimped by the 18 percent gain in the kiwi dollar against the Australian currency over the past 12 months

The Australian Industry Group's Performance of Manufacturing Index, a private gauge of activity in the sector, contracted for a fourth month in February. The industry group called for increased competitiveness and productivity if the economy was to “find new sources of growth as the boom in mining investment wanes”.

The Australian PMI index stood at 48.6 last month, on a scale where a reading below 50 signals contraction. The same New Zealand measure, the BNZ-BusinessNZ PMI stood at 56.2 for February, and has been expanding for 18 consecutive months.

Last month Fletcher Building, New Zealand’s largest listed company, described Australian conditions as soft. It reported a 27 percent decline in its first-half Australian earnings, which account for half the company’s business. A 1 percent gain in sales in Australian dollar terms translated to a 10 percent decline to $1.7 billion, once converted back to the kiwi dollar.

The Auckland-based building company said the outlook for Australian commercial construction remained subdued, with low state government spending on infrastructure, while the mining activity looked “depressed”.

Nuplex shares were unchanged at $3.60. They are rated ‘hold’ by four out of six analysts surveyed by Reuters, with an average target price of $3.65. Fletcher shares, which are also rated ‘hold,’ fell 1.4 percent to $9.48, according to Reuters, with an average target price of $9.42.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Auckland Outage: Power Mostly Restored Overnight

Vector wishes to advise that all but 324 customers have been restored overnight. These customers are spread throughout the network in small pockets. The main St Johns feeder was restored around midnight allowing most of the customers in all affected areas to have power this morning. More>>

ALSO:

Half Empty: Dairy Prices Drop To Lowest Since August 2009

Dairy product prices fell to the lowest level in more than five years in the latest GlobalDairyTrade auction, led by declines in butter milk powder and whole milk powder. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
More RSS  RSS
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news