KEY POINTS:
Shares in resins company Nuplex Industries leapt yesterday after it reported a near tripling of net profit.
Nuplex shares jumped 41c, or 7 per cent, when the market opened yesterday after the company announced that half year net profit had risen 185 per cent to $24.6 million. Shares
eventually closed at $6.10, up 31c.
Operating profit for the six months ending December 31 was up 60 per cent from $15 million, while earnings before interest and tax (ebit) rose 35 per cent to $50.7 million.
An interim dividend of 20c per share was declared, up from 15.5c for the previous corresponding six months.
The company is Australasia's largest maker and distributor of resins and specialty compounds, with manufacturing plants in New Zealand, Australia, Europe, Asia and the Americas.
Group managing director John Hirst said profit grew in nearly all regions with increased volumes and margins. The only exception was the US, which was affected by the foreign exchange and a softening economy.
China, Brazil and the United Kingdom experienced an earnings turnaround, with combined losses reduced by $4.3 million.
Hirst said all operations were now ebitda positive, and although raw material costs had increased, they were recovered.
The outlook for the near future was positive. "The second half has started well, with demand in line with the first half. Raw material costs are expected to rise, but the increases will be recovered in prices. All businesses are trading profitably."
Hirst said should this continue, the group's guidance of approximately $120 million ebitda for the 2008 financial year will be at the lower end of expectations.
He expected future sales growth to result from additional capacity in Europe and the UK, increased demand and capacity in Asia, and the acquisition of a US company last November.
For the six months ending December 31, the company's resins business brought in revenue of $581.4 million, up 4.2 per cent, while ebitda was $49.4 million, up 22.3 per cent. The results included an adverse foreign currency translation of $2.5 million.
One analyst, who asked not be named, said the results were ahead of expectations.
"It's pretty hard to make fault with what they've produced today."
He said there were obvious uncertainties about the future, but the company appeared to be containing the impact of exchange rates, raw material costs and the price of oil.
Demand for their products in markets such as Europe were, however, still uncertain for the near future, he said.