Expansion in Asia pays for Nuplex

Emery Severin says Nuplex has witnessed a turnaround in profitability in the Australian and New Zealand businesses. Photo / Natalie Slade

Nuplex Industries, which makes resins used in industrial coatings and paint, is forecasting a 64 per cent gain in sales in Asia by 2018 as its expansion of plants in China, Vietnam, Thailand and Indonesia bears fruit.

The Auckland company expects sales from Asia of about US$400 million by the end of 2018, up from US$243 million in 2014, according to a presentation for an investor day.

The company expects double-digit growth in Asian earnings before interest, tax, depreciation and amortisation in 2016 through 2018.

Nuplex has been cutting back operations in Australia and New Zealand, where a weaker performance is weighing on growth in Asia, America and Europe.

In November it sold its Australasian agency and distribution business, Nuplex Specialties, and its plastic additives business, Nuplex Masterbatch, for A$127.5 million to focus on global resins. It used the proceeds to reduce debt and is buying back as much as 5 per cent of its shares.

As a result, its percentage of sales from Australasia, excluding the part-year contribution from Specialties, will shrink to 23 per cent this year, from 40 per cent last year, the presentation shows.

Asia is forecast to make up 23 per cent of sales, compared with 17 per cent last year, while Europe, Middle East and Africa climb to 42 per cent from 34 per cent and the Americas to 12 per cent from 9 per cent.

In Asia, Nuplex has market-leading positions in China in five of its six product lines and ranks number one in both Indonesia and Malaysia in four. Its two-stage strategy for Asia includes spending $60 million in phase one since the start of 2011 to increase capacity by 75 per cent.

The biggest commitment is in China, including a US$4 million regional research and development centre in Suzhou opened in April 2014 and US$35 million to double capacity at its factory in Changshu.