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Nuplex cuts earnings forecast

By Paul McBeth

Tuesday 25th November 2008

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Nuplex Industries, a manufacturer of resins and ingredients used to make paint, printing ink and adhesives, cut its earnings forecast for 2008/09 by as much as $25 million, sending its stock tumbling.

Weak demand in October and November prompted the company to reduce its earnings forecast to as little as $105 million, a fall of over 19%. At its annual meeting three weeks ago, managing director John Hirst said the company could exceed its record EBITDA of $122 million, with analysts forecasting earnings in the region of $130 million. Nuplex’s share price fell 5.6% to $4.25.

“Results for October were below what had been anticipated at the time of the Annual Meeting and there has been no recovery during November,” said Hirst. “Future demand remains the great uncertainty.”

The company is confident lower commodity prices will bolster its second-half performance next year, and it is working to minimise costs and conserve cash reserves. Nuplex extended its bank credit facilities, most of which were due to mature in November next year. It is well placed to “take advantage of the upturn when it comes,” Hirst said today.

Nuplex’s shares have tracked the NZX 50 Index over the past 12 months, falling 35%.

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