Managing director John Hirst says customers are holding off placing orders in the expectation of a fall in prices. Photo / Richard Robinson
Managing director John Hirst says customers are holding off placing orders in the expectation of a fall in prices. Photo / Richard Robinson
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Shares in resins and chemicals company Nuplex plumbed a fresh year low yesterday after it said full year earnings could be up to $17 million lower than last year.
In spite of a surging market, Nuplex shares slid to a fresh 52-week low of $3.82 by the closeof trade, down 68c or 15.1 per cent.
The company had posted a record ebitda of $122 million last year, and told shareholders at its annual meeting last month that analysts' forecasts of a $130 million ebitda this year were achievable.
But it said yesterday it has seen a significant turnaround in demand and confidence in world markets.
Nuplex was now forecasting first-half ebitda to be between $45 million and $50 million, with second half ebitda around $60 million, putting full year earnings at between $105 million and $110 million. Group managing director John Hirst said October sales were below expectations, with no recovery in November.
"Current sales are believed to be artificially low as the market adjusts inventory levels to new demand patterns to conserve cash."
Customers were holding off placing orders in the expectation of a fall in prices due to weak crude oil costs, and oversupply from falling demand, he said. But higher cost inventories would take some time to work through the system, making it difficult to fully predict demand.
"While future demand remains the great uncertainty and outside the company's influence, the fundamental businesses remain sound and well positioned to take advantage of the upturn when it comes."
Hirst said most of the company's credit facilities which were due to mature next November have been extended.
