By Paul McBeth
Feb. 21 (BusinessDesk) - Specialty chemicals maker Nuplex Industries missed expectations as its net profit more than halved and the company cut its forecast for annual earnings, blaming the strength of the currency and weak trading conditions in Australia and Europe.
Net profit sank to $11.5 million, or 5.8 cents per share, in the six months ended Dec. 31 from $24.1 million, or 12.3 cents, a year earlier, the company said in a statement. Sales gained 11 percent to $828.7 million, while earnings before interest, tax, depreciation and amortisation increased 0.5 percent to $57.6 million, including restructuring costs. Underlying profit, which strips out the restructuring costs, fell 9.6 percent to $24.5 million.
That missed First NZ Capital's forecast profit of $18.6 million and ebitda of $66.1 million, and Forsyth Barr's estimates for underlying profit of $13.7 million on sales of $887.6 million.
Last year Nuplex flagged four plant closures and cut as many as 80 jobs in a bid to counter the rising cost of manufacturing in Australasia. The cost-cutting initiatives were expected to remove $30 million in expenses in the 2013 financial year, and Nuplex said it's still on target to meet that.
"Whilst these restructuring and procurement initiatives impact this financial result, I am confident they will strengthen Nuplex's operations and start to deliver benefits as soon as the second half of this financial year," chief executive Emery Severin said. "Keeping our focus on what we can control remains key to navigating the ongoing challenging business environment."
Nuplex cut its forecast annual ebitda to between $135 million to $140 million, from a range of $135 million to $150 million, blaming the strong kiwi dollar and weak Australian and European trading conditions. The guidance assumes exchanges rates and trading conditions remain the same in the second half.
The board declared a partially-imputed interim dividend of 10 cents per share, unchanged from a year earlier. The dividend will be paid on April 2 to all shareholders on the register on March 15.
The company flagged a $34 million contingent liability over a claim it faces relating to the supply and installation of materials at the Botany Town Centre in Manukau between 2000 and 2001. Nuplex is named as one of 17 defendants, and will vigorously defend the suit, it said.
Nuplex's resins segment, which makes up the bulk of its earnings, lifted sales 13 percent to $671.1 million on 17 percent growth in volumes. Ebitda fell 3.6 percent to $45.2 million. Nuplex expects a stronger second-half, with typically bigger sales in the Northern Hemisphere.
The specialties segment increased sales 5 percent to $157.6 million, with ebitda up 19 percent to $12.4 million.
The shares rose 0.3 percent to $3.47 in trading yesterday, and have gained 9.5 percent this year. The stock is rated an average 'hold' based on six analyst recommendations compiled by Reuters with a median target price of $2.98.