Nuplex shares jump on positive earnings and special dividend

Nuplex Industries, the specialty chemicals maker forced to sell stock at a discount to strengthen its balance sheet, posted full-year earnings that beat its guidance and announced a special dividend. The shares jumped.

Earnings before interest, tax, depreciation and amortization fell to $91.5 million in the 12 months ended June 30, beating the company’s May forecast of $87 million while down from $122 million in 2008. Net income tumbled 65% to $16.7 million.

Shares of Nuplex rose 7.9% to $2.33. The company was forced to raise funds selling shares for as little as 23 cents apiece this year to strengthen its balance sheet as demand waned and a weak kiwi dollar swelled the value of its overseas debt. Since then it has made a one-for-four share consolidation. The 2009 year was “the most testing” in Nuplex’s history and the company is focusing on cash generation, controlling debt and spending, managing director John Hirst said today.

The special dividend “looks designed to give added confidence to the fact that business is improving,” said Alan Moore, who helps manage NZ$300 million at Milford Asset Management. “Things are not storming along but recovering slowly. You’ve got to believe the global economy is improving and they are the sort of company that will benefit from it.”

EBITDA at its resins business, which supplies raw materials for coatings, adhesives, textiles and printing ink, fell 25% to $99 as sales fell 3% to $1.2 billion.

Earnings from its Specialties division, that supplies raw materials to the Australasian chemical, plastic, construction, coatings and life sciences sectors, fell 24% to $22.8 million, with sales little changed at $330.9 million.

The company will pay a final dividend of 5 cents a share plus a special dividend of 3 cents, which it said reflects “confidence in the company’s future performance and the strength of the balance sheet.”

Hirst said current trading conditions “are best described as stable” though there is “general optimism that the worst downstream impacts of the global financial crisis are behind us.”

“Government stimulus programmes have had positive and sustainable effects on various key economies,” he said. “We hold a conservative view of near-term demand and are becoming more optimistic for the medium term.” 

Businesswire.co.nz

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