Nuplex year net profit rises 37 per cent

11.00am

Chemicals and resins manufacturer Nuplex today reported its June year net profit rose 38 per cent to $28.4 million.

Nuplex, which is expanding into China, said in May it had benefited from better than expected trading conditions in the three months ended April.

"The company expects to maintain growth in the current year and is currently evaluating opportunities to achieve further international expansion," chairman Fred Holland said in a statement.

The company declared a final dividend of 13 cents per share, up from 10.5c a year ago.

Sales increased 4 per cent to $655m and the pre-tax operating surplus rose 28 per cent to $40.7m.

Earnings per share rose to 45.9c from 34.1c.

Earnings before interest, tax, depreciation and amortisation (ebitda) increased by 14 per cent to $74.2m due to higher sales, some margin recovery, reduced costs, and further realisation of synergies from the APS acquisition.

Unusual items of $2.4 million ($1.8 million) included the write down of goodwill following an impairment review, a tax uplift resulting from consolidating Australian companies into a single tax regime, and costs from plant write downs related to planned site closures that will provide future efficiencies.

Mr Holland said demand for the full range of products and services remained strong in New Zealand and Australia.

Sales attributed to New Zealand were affected by reduced resin volume transferred to Australia as that division became more self sufficient in production capacity.

Investment in additional manufacturing capacity in Vietnam last year led to an 80 per cent growth in sales in that region.

Mr Holland said that acquisitions made during the year would provide strategic benefits that would contribute to earnings in the current year.

"Operational efficiency gains will be made through recent investment in capacity, plant efficiencies and site rationalisation. As reported previously the investment in China is expected to produce a moderate loss in the 2005 year but future prospects remain bright," he said.

Demand from most market sectors was anticipated to remain solid for at least the next six months. High oil prices, capacity constraints in petrochemical production, and the effect of enormous demand from China was contributing to rising raw material costs, he said.

"While this is putting pressure on margins, management remains confident that markets will react appropriately and that increased costs will be satisfactorily managed.

Nuplex shares were unchanged on $5.30 today, having traded between $3.81 and $5.40 in the last year.

- NZPA