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Nuplex benefits from stronger Aussie market

By Phil Boeyen, ShareChat Business News Editor

Friday 22nd February 2002

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Resins and waste group Nuplex (NZSE: NPX) is touting a record first half with a strong performance from its Vietnam subsidiary and a return to form in Australia.

The company's net profit for the six months to the end of December rose 11% to $9.67 million from $8.67 million previously with sales up 4% to $213.93 million. Earnings per share of 16.5 cents compares with 15.3 cents per share previously.

Nuplex says that over the six month period the business environment returned to more normal conditions following the dramatic demand downturn experienced during the December 2000 quarter, particularly in Australia.

"Pressure on margins also reduced as petrochemical raw materials costs steadily returned to more normal levels during the period," the company says.

The performance chemicals division, which accounts for 83% of sales, grew earnings by 4% over the previous interim period with Nuplex Vietnam now accounting for 7% of group earnings.

The company describes its Vietnam subsidiary as the star performer during the period with high demand and further market penetration increasing sales by 39% and earnings by 185%.

"Capacity has been increased to meet demand from a growing domestic economy. Investment in new plant and equipment is underway with commissioning planned for 2003."

Nuplex says its policy of expansion in Asia has focused on China with steps being taken to establish a representative office in Guangzhou.

"This will be a base for increasing our understanding of the complex Chinese market and assisting market penetration for the group's businesses before contemplating any significant investment."

Although the Australian building industry remains "very active and business sentiment is positive" the company says there are few signs that the New Zealand construction industry is returning to a historical demand pattern.

The soft New Zealand residential market also affected the company's construction products' business although it says the entry in to the Australian cladding market has been positive.

After last year's surprise $11.88 million writedown of the Australian medical waste business, Medihold, shareholders will no doubt be pleased to see the environmental business has increased interim earnings by 10%.

The company's liquid waste businesses performed slightly ahead of the previous year and Nuplex says the outlook is positive for the remainder of the year. Although quarantine waste operations were impacted by the decrease in air travel, the medical waste segment has shown growth.

"As previously reported the NSW Public Health business was lost from December and will impact future performance.

"However, management is well advanced in implementing a new strategy that, with tight control of operating expenses, will see a contribution from this sector much in line with the previous year with good prospects for future growth."

The company is picking a "continuing solid performance" for the rest of the fiscal year and is paying an interim dividend of 8 cents per share, the same as last year.

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