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 $5.8
million in 2015,'' Mr Rooney said.
Mr Severin said the performance of Europe and Asia during the
past year was pleasing and had exceeded management
Nuplex is commissioning a third site in China, adding
capacity in Indonesia and investing 7.5 million ($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
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.