Nuplex reports huge rise in annual profit

Resins maker and waste management company Nuplex Industries today reported June year profit from ordinary activities after tax rose 15 per cent to $38 million.

It said the bottom line was up 87.3 per cent rise in full year profit to $61.9m on gains from an asset sale and higher sales.

Earnings are anticipated to show steady growth during the 2006/07 year, chairman Fred Holland said.

"Demand in most markets is likely to be flat but Asia should continue to grow," he said.

Cost rationalision in the 2005/6 year would benefit the current year.

The June year profit included a gain of $24.7m from the sale of its environmental services group.

The company said in February it expected to have earnings before interest, depreciation, and amortisation (ebitda) of around $100m, and in the end they came out at $103m, up 27 per cent.

Revenue from ordinary activities rose 40 per cent to $1.3 billion.

A final dividend of 19.5 cents with 4 cps imputation credits will be paid on October 20. The total dividend for the year was 44cps, up 12 per cent.

Most New Zealand resident shareholders will receive a final cash dividend of 15.745 cps after deducting Resident Withholding Tax.

The company had previously signalled it would be unable to fully impute future dividends for New Zealand residents.

Growth principally came from a full year's contribution from the new resins business, Mr Holland said.

The performance from traditional Australian and New Zealand markets was flat.

The Asia division provided high growth with China delivering its maiden profit and both the Americas and Europe benefited from stronger demand and market success.

Mr Holland said the various regional results endorsed the strategy of regional diversification.

"Certain businesses remain underperforming with unrealised losses leading to an abnormally high tax rate," Mr Holland said.

However, he said there would be future tax benefits from current turnaround programmes with these operations.

Escalating crude oil prices and capacity shortages in refining and petrochemical manufacturing had driven up raw material costs throughout the year and increased investment in working capital.

These costs were generally recovered but some time lag in a competitive environment frustrated efforts to fully return margins to historical levels.

High utility and transportation costs also combined to make it a testing environment for the global resins business which represents 83 per cent of group profit, Mr Holland said.

With the acquisition of Polychem and Multichem, the Australasian based speciality products business now represented 13 per cent of continuing operations and was well positioned for future growth.

Nuplex share were up 3c on $6.33 this morning after the result. They have traded between $3.93 and $6.70 over the year.

- NZPA