Vertex posts first half profit in line with revised forecast

2.30pm

Plastics manufacturer Vertex posted a 19 per cent rise in six-month net profit to $1.70 million, and will pay a dividend of 6.1c per share.

The company, which saw its shares tumble on a profit warning not long after listing, said its results were in line with the revised forecast.

Sales of $41.9 million were 10 per cent below the prospectus forecast, but in line with the revised forecast of $41.7 million.

Sales in the same period the previous year were higher at $44.3 million.

Earnings before interest and tax of $4.6 million was 12 per cent below prospectus forecast, slightly ahead of the revised forecast of $4.4 million, and 17 per cent ahead of the previous corresponding period.

The key impacts on the earnings shortfall all occurred in the second quarter, the company said in a statement today.

The technical injection divisions and Securefresh, which manufactures long-life chilled meat packaging, were most affected.

"The sales shortfall, as previously detailed, was caused primarily by customer delays in new product launches, reduced demand from exporters and the effects of the Australian drought on a number of customers supplying the agriculture industry," the company said.

Capital expenditure exceeded prospectus forecasts because of the earlier than planned purchase of a $1.6 million open cell foam forming machine.

Vertex said the outlook for the second half was uncertain as a result of the strengthening New Zealand dollar, the ongoing Australian drought, and weather in New Zealand predicted to affect agricultural customers.

However, directors said they were confident Vertex would stick to its revised forecast earnings and full-year dividend payout.

The company has expanded sales capacity; moved its technical injection business to Hamilton where it has completed two prototype production runs; and increased pre-tax earnings in its household products division.

Earnings per share plunged to 5.2c per share from 21.2cps the previous year.

The fully imputed dividend, payable on January 16, was in line with forecasts, and on track for a 14.2cps total payout.

Vertex is currently being reviewed by both the stock exchange Market Surveillance Panel and the Securities Commission.

The commission is looking into the offer and allotment of Vertex shares after its initial public offering in June, while the exchange is investigating whether Vertex complied with listing rules, such as sufficient disclosure.

Vertex listed at $2.05 but its share price touched an all-time low of $1.14 in October. The shares last traded at $1.36.

Vertex emerged from Carter Holt Harvey's plastics packaging business. Its most recognisable products include containers for Tip Top brand ice-cream and Fresh 'N Fruity yoghurt.

- NZPA