Nuplex shares soar on record first-half profit, reinstated dividends

Friday 22nd January 2010

Shares of Nuplex Industries Ltd., the resins maker that was forced to strengthen its balance sheet last year, soared after the company said it made a record first-half profit and lifted its full-year forecast.

The shares jumped 8.2% to $3.30 after the announcement, which included the decision to resume paying interim dividends. Profit in the six months ended Dec. 31 exceeded Nuplex’s previous record of $60.6 million in the first half of 2008, managing director John Hirst said in a statement.

The chemicals company has climbed out of a hole in 2009, when it was forced to renegotiate bank debt and raise more equity to shore up its balance sheet. It was forced to sell shares at a deep discount and renegotiate its funding as the New Zealand dollar plunged, driving up the value of overseas debt as demand for its products dwindled. Hirst is due to retire at the end of June and long-serving chairman Fred Holland left at last year’s annual meeting.

“Trading conditions remain solid through November and December and raw material costs were stable, while our businesses continue to operate at increased levels of efficiency,” Hirst said. “We anticipate a record result for the first half.”Nuplex will release its complete first-half results on Feb. 25.

The firm also lifted its forecast for full-year earnings before interest, taxation, depreciation and amortisation (EBITDA) to between $120 million and $135 million from a previous range of $110 million and $120 million, the third time in three months that the company has raised its guidance.

As a result of improved cash flow, the company’s board will reinstate the payment of interim dividends, it said. Nuplex has been raising its earnings forecast as it returns to profitability amid strong demand out of Asia.

The resins maker has become a favourite among analysts and is rated an ‘outperform’ in a Reuters survey. Within the survey, two gave it a ‘buy’ rating, two gave it an ‘outperform’ rating, and two gave it a ‘hold’ recommendation. Goldman Sachs JBWere head of asset management Stephen Walker picked Nuplex as one to watch this year.

Businesswire.co.nz

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