Nuplex predicts strong growth with Asia move

By ELLEN READ

News of an expected 20 per cent jump in net profit to $25 million for the year to next June and plans to set up a factory in China kept 200 Nuplex shareholders glued to their seats at the company's annual meeting.

Chairman Fred Holland said Nuplex was looking at setting up a resin manufacturing operation in the people's republic, which would mean it could supply Asian markets more cheaply than from NZ or Australia.

The company exports about $20 million of product a year to Asia.

Managing director John Hirst said six years' experience of manufacturing in Vietnam and two years' with a sales office in China meant Nuplex could proceed "confidently but cautiously" with such an investment.

Vietnam had been a "revelation". "Growth rates are huge by our standards and competition from other producers is fierce.

"We have built a successful business, only inhibited in recent times by an inability to produce more product through capacity limitations. It has been another learning experience."

Hirst said the company was considering several options for its China factory and it could be up to 12 months before an announcement was made either to build a factory or to buy and adapt an existing plant.

Costs were not mentioned but would likely be between US$5 million and US$15 million and could be met from existing resources.

Steady trading conditions over the first quarter backed by strong demand here and across the Tasman, growth in Vietnam and synergies from the purchase of Australia's Asia Pacific Specialty Chemicals were behind the increased profit forecast.

Holland said the $25 million forecast was the mid-point of expectations, and could be adversely affected by currency movements because 75 per cent of sales took place in US and Australian dollars.