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

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news