Nuplex restructuring continues apace, following a $A127 million ($NZ141.8 million) subsidiaries sale, removal of a management tier and its ongoing focus on building its global resins capacity.
At the Nuplex annual shareholders meeting, chief executive Emery Severin said operating earnings before interest, tax, depreciation and amortisation (ebitda) was $125.7 million, similar to a year ago, but strong earnings growth in the global resins segment was offset by lower earnings from the Australia-New Zealand (ANZ) focused specialties segment.
Nuplex is selling its agency and distribution business, Nuplex Specialties, and its plastics additives business, Nuplex Masterbatch, to Axieo for $127.5 million.
Mr Severin said following the structural decline in the Australian manufacturing industry, the restructure of the region aligned the ANZ operations with the expected market demand.
''Whilst in the 2014 financial year the benefits of these actions was largely offset by the cost of implementing them, this year they are expected to deliver incremental benefits of $6.4 million and start to improve the returns generated from this region,'' he said.
Craigs Investment Partners broker Peter McIntyre said while Nuplex full-year 2015 guidance range expected ebitda of $127 million to $137 million, once the Specialties' sale and estimated income loss of $12 million was taken into account, the ebitda range would drop to $115 million to $125 million.
''The guidance range issued is, therefore, effectively about a 6% downgrade to consensus,'' he said.
He noted that while Nuplex said the ANZ market conditions had been steady, the volumes for the Australian Coating Resins business, which is unsold, remained challenging, although the restructuring in general was on track and expected to deliver improved performance.
Nuplex had said it anticipated steady demand in North America, but Mr McIntyre had concerns about Europe. Mr Severin said modest growth was expected in Europe during the 2015 financial year, but added that regional management was cautious a slowdown could occur during second-half trading.
Asia was expected to deliver modest growth, with forecast steady growth in China, Vietnam and Indonesia, but moderated by the impact of initial fixed costs of commissioning a new site in China, plus new capacity in Indonesia, Mr Severin said.
In ANZ, market conditions had been steady, except within the Australian Coating Resins business, where volumes continued to be challenging because of changing customer demands.
''We expect the benefits of the restructure will deliver an overall improvement in profitability in the 2015 financial year,'' Mr Severin said.
