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Nuplex sees full-year earnings at bottom of range

Tuesday 5th June 2012

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Nuplex Industries, the specialty chemicals maker, said full-year earnings would be at the bottom end of its range although second-half trading has met expectations and margins have improved. The shares rose about 0.9 percent in a falling market.

Earnings before interest, tax, depreciation and amortisation will be about $131 million, in line with its 2011 results, the Auckland-based company said in a statement. It had previously flagged earnings growth would be “flat to 5 percent year on year.”

“During the period, in addition to challenging market conditions, exchange rates and raw material prices have fluctuated significantly,” said chief executive Emery Severin. “However, with our focus on managing those elements we can control, we have seen an improvement in unit margins.”

Trading in the second half has been “broadly in line” with company expectations when it gave its guidance in February, he said.

Shares of Nuplex rose 0.9 percent to $2.23, having tumbled 29 percent in the past 12 months. The stock is rated a ‘hold’ based on a Reuters survey of analysts.

Severin said in the ANZ region, Nuplex has faced challenging market conditions “as demand from the manufacturing sector has remained weak and activity in the construction sector has continued at a cyclical low.” Nuplex’s own manufacturing volumes are likely to be down about 12 percent year on year, a bigger drop than the 9 percent previously flagged.

Asian volumes are likely to be flat year on year though there has been a “slight” improvement in the second half. In Europe, demand patterns have followed the economic fortunes of the nations in the common area, with northern European demand holding up while in the south it is weaker than last year.

Excluding the recently acquired Viverso business, exports volumes would be down about 5 percent from a year ago. Viverso is expected to make an EBITDA contribution of at least 5 million euros in the second half.

US volumes would be little changed though “positively, over the past few months we have seen demand strengthen on the back of improved manufacturing activity,” the company said.

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