Nuplex Industries says it is to immediately close manufacturing operations in Brazil, eliminating annual losses of around $3 million.
It also said today it expected earnings before interest, tax, depreciation and amortisation for the current year to be at the bottom, or marginally below the $103 million to$110m range previously forecast.
That was due to a bad debt in the order of $2m suffered by the company's European business, the strong New Zealand dollar, and the delayed closure of the Seven Hills site in Australia, which will be shut by June 30.
Brazilian closure costs would result in an abnormal charge of $1m, in addition to a $2.5m plant and equipment write-down taken at the half year.
Nevertheless, South America remained a strategic target market for the company and a strong presence would be kept there, Nuplex said.
Future market requirements would be serviced from existing regional Nuplex manufacturing operations through the company's Sao Paulo-based sales and distribution office.
In other major growth and restructuring projects, key capacity building programmes in Europe would be finished in line with forecast, and would contribute significantly to next year's performance, Nuplex said.
With the restructuring programme finished and capacity growth projects in line with forecast, the company said it remained confident of a substantial lift in profit in the 2007/08 year, in line with previous announcements.
Nuplex manufactures and distributes technical materials, resins and polymers used by the paint, ink, adhesive, fibre-reinforced plastics, paper and textile industries. It also supplies industrial chemicals and specialist building products.
Its shares dropped 19c to $7.11 after the sharemarket opened today.
