KEY POINTS:
Specialty resins and chemicals company Nuplex Industries is predicting earnings to fall this financial year.
The company said today that results for October were below anticipated levels and there had been no recovery during November.
"A continuation of this pattern will see full year results fall short of our previous expectations."
Earnings before interest, tax, depreciation and amortisation (ebitda) for the first half was now forecast to be in the range of $45-$50 million.
Taking into consideration an improvement in customer buying patterns together with the early impacts of efficiencies and other cost reduction actions, ebitda for the second half was expected to be around $60m.
In the year to June 2008, Nuplex posted ebitda of $121.8m.
"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," Nuplex said.
"Current sales are believed to be artificially low as the market adjusts inventory levels to new demand patterns to conserve cash. Customers are also holding off placing orders in an expectation of lower pricing driven by both weak crude costs and the effect of supply substantially exceeding demand," the company said.
But higher cost inventories would take some time to work through the system, and it was not possible to predict fully the likely demand pattern on which to estimate performance.
Most of the company's credit facilities which were due to mature in November 2009 were being extended with existing banks.
Credit approvals had been received for A$200m ($241.4m) to mature in November 2011, A$100 million in November 2010, with negotiations for the balance of A$50 million still to be concluded, the company said.
Despite the downturn in performance Nuplex remained in compliance with the financial covenants of its funding facilities.
- NZPA
