Paint and resin manufacturer Nuplex has posted an almost 18% gain in profit, and continues its expansion into crucial Asian and European markets.
Revenue for the year to June was down 1.5%, from $1.66 billion to $1.63 billion, while after-tax profit soared 17.7%, from $44.5 million a year ago to $52.4 million.
Four years ago, Australia and New Zealand operations contributed 40% of Nuplex's earnings, but that was now down to about 15%, while earnings from Asia and Europe had grown to 70%, Nuplex chief executive Emery Severin said.
''Over the past four years, Nuplex has transitioned from an Australian and New Zealand-centric company with global operations, into a global business with Australian and New Zealand operations,'' he said in a statement yesterday.
Nuplex shares spiked 7% to $3.10 after the announcement.
Craigs Investment Partners broker said while the result was ''as expected'', and evidence of the Europe-Asia expansion and restructuring of Australian and New Zealand operations was important for both retail and institutional investors.
While some business sales were offset by other losses, Craigs Investment Partners broker Peter McIntyre noted a $14.6 million provision for debt, in a joint venture, had been reduced by $5.8 million.
Forsyth Barr broker Andrew Rooney noted Nuplex had in June lowered its profit guidance for earnings before interest, tax, depreciation and amortisation to between $121 million and $125 million and so yesterday's announcement of $125.7 million ''was a good result, but is still a low number''.
''Our read on Nuplex's full-year 2014 result is that the worst is now behind it, the negative momentum in the Australasian market ... has played out.
The move by management to right-size the Australasian resin operations is expected to have annual cost savings of $5.8 million in 2015,'' Mr Rooney said.
Mr Severin said the performance of Europe and Asia during the past year was pleasing and had exceeded management expectations.
Nuplex is commissioning a third site in China, adding capacity in Indonesia and investing 7.5 million ($NZ11.8 million) in Russia, while in Germany about 3 million in cost savings is expected.
Mr Severin predicted market conditions for Australian and New Zealand operations would not improve ''in the near term'', while Asia would continue to experience ''steady growth''.
However, Australia's performance was much weaker than expected because of increased pressure on profit margins in both the resins and specialties segments, he said.
''In early 2014, in Australia we started to see these weaker-than-expected conditions becoming evident, and in February we announced the reorganisation of the [Australian and New Zealand] businesses to reduce overhead costs,'' he said.
The net costs of this business unit reorganisation of $2.4 million combined with the deterioration in the underlying Australian business performance weighed on the group's result, and offset the growth delivered in Europe and Asia and steady performance in the Americas.
''Importantly, the [Australian and New Zealand] restructure is now largely complete.
''The programme of work to reduce the region's manufacturing capacity by 30%, commenced during the 2013 financial year, will be finished by the end of 2014,'' Mr Severin said.
