Slow recovery underpins Nuplex in key markets

Wednesday 9th June 2010

Nuplex reports gradual recovery across its main markets and expects to be able to increase prices to offset rising raw material prices.

In an investor update presentation lodged with the NZX, Nuplex says its previous guidance of earnings before interest, tax, depreciation and amortisation remains on track for a record year at between $125 million and $135 million "largely driven by demand and some margin recovery."

Nuplex shares jumped 4.7% to $2.90 on the NZX and have dropped 16% in the past month.

After a horror year in 2008/09, caused by the triple whammy of high foreign debt, a weak kiwi dollar and the global recession, Nuplex reports interest costs will be "much lower" in the current financial year, and that capital expenditure needs are low until 2011, with a new executive team in place.

In its American markets, Nuplex says some recovery in demand is occuring, and that operations will be assisted by lower operating costs and gains from new technology.

In Asia, which continued to show strength last year, growth will continue but at a lower rate, and with some margin tightening, while in Australia market conditions are roughly the same as last year and lower operating costs will assist.

The New Zealand market is in "slow recovery phase". The domestic operation has high fixed costs that need to be addressed, with corporate costs - albeit under better control - exceeding operating profit.

Nuplex is "cautiously optimistic" about Europe, although that market could stall this year.

Businesswire.co.nz

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