Competition in Australia and New Zealand has prompted Nuplex
to downgrade its earnings before interest, tax, depreciation
and amortisation (ebitda) expectations for the full year; a
downturn including restructuring costs and foreign exchange
The industrial resin and plastics additive manufacturer had
predicted ebitda at the lower end of its guidance range of
$130 million to $145 million, but yesterday slashed that
further to between $121 million and $125 million.
From its earlier half-year to December report, lodged in May,
Nuplex booked a decline in sales from $828.7 million a year
ago to $815.2 million, while after-tax profit fell from $12.6
million to $12.5 million.
Nuplex' shares were down more than 6%, at $3.15 following the
But chief executive Emery Severin said yesterday he expected
the full-year, after-tax profit to be ''similar'' to last
year's $42.9 million and Nuplex' dividend to be replicated,
given ''underlying business performance and cash flow outlook
for the next six to 12 months''.
''It is disappointing to see the impact of ANZ's [combined
Australia and New Zealand's] unexpected weaker performance,
including the accounting adjustments, more than offset the
improvement in EMEA [Europe, the Middle East and Africa] and
the steady growth in Asia,'' he said.
The estimated negative foreign exchange impact of about $2
million was from the strengthening of the New Zealand dollar
during the past five months, while the downgrade included net
costs of $2.4 million associated with the ANZ restructuring
Mr Severin said Nuplex expects ANZ Resins segment ebitda to
be down between 35% to 40% compared with the same period last
year and the Australian and New Zealand focused Specialties
segment ebitda to be down between 45% to 50%, ''primarily
reflecting margin pressure in both segments''.
In its half-year report last month, Nuplex said during the
past three years its ANZ division faced challenging
conditions as many of its markets had been affected by
declining levels of activity, increased competitive pressure
and structural change from the strength of the Australian and
New Zealand currencies forcing manufacturers to move
To better position Nuplex ANZ, it was streamlining the
manufacturing network and reorganising the businesses into
leaner, more focused business units.
''This programme involves reducing Nuplex's ANZ capacity by
30% through consolidating Nuplex's seven ANZ production sites
"It will deliver realised cost savings in the next financial
year of approximately $5.6 million, and then ongoing,
annualised cost savings of $6.5 million,'' the company
reported in May.
Mr Severin said yesterday because of a weaker ANZ performance
in May, and expected for the balance of the year from further
weakness in Australia, ANZ's ebitda would be down about $4
million, compared with previous expectations.
''Whilst volumes have been in line with expectations,
management expects the margin pressures to continue,'' Mr
Trading conditions in Europe had been better than
management's expectations, and improved during the past four
months, while Europe, the Middle East and Africa, ebitda was
expected to be up between 15% to 20%, year on year, in local
Asia has performed in line with management's expectation for
steady growth, ebitda expected to be up between 10% and 15%
year on year in local currency, while in America, business
had been on track to deliver modest ebitda growth.
Nuplex is scheduled to deliver its full-year result on August