Nuplex confirms full year forecast

Nuplex managing director John Hirst

Resins maker Nuplex Industries confirmed it continues to expect full year earnings before interest, tax, depreciation and amortisation (ebitda) of $87 million.

Group managing director John Hirst said that based on performance to the end of April, Nuplex was on target to report second half ebitda at least in line with the first half.

In the six months to the end of December, Nuplex reported ebitda of $43.4m, while in the full 2008 financial year ebitda was $122m.

"We are seeing early signs of recovery in some markets, with a general sense of stability in the remainder," Hirst said.

Last month Nuplex raised $159.5m in equity capital, with proceeds used to reduce the company's bank debt and lower its gearing ratio and interest costs.

Nuplex was stung by depreciation in the New Zealand dollar, which saw its foreign currency bank debt increase. It had failed to comply with a covenant requiring debt of no more than three times ebitda as at December 31, 2008.

Hirst said today that the company's strategic priorities were to focus on cash flow, ensure the group's cost base was aligned with market demand, retain critical skills, and manage capital expenditure appropriately.

"Following the recent equity capital raising, which lowered Nuplex's net debt gearing to approximately 25 per cent at 30 April, the company has a conservative balance sheet with the resources to take advantage of further growth opportunities. We also have strong operational free cash flow."

Nuplex's products were essential inputs into its customers' manufacturing processes so, while demand remained restrained, any uplift would translate into higher sales.

That uplift could result from inventories throughout the supply chain reaching equilibrium, or increased consumer spending, Hirst said.

"Performance in each market depends upon local economic conditions but the company continues to be profitable and is well placed to benefit significantly when demand returns to more normal levels."

Nuplex shares were up 1c to 39c at lunchtime today.

- NZPA