Nuplex Looks To Profit Increase

Nuplex Looks To Profit Increase And Establishing China Manufacturing Operation

Statement made by Nuplex Industries Limited based on the contents of addresses given by Chairman, Fred Holland, and Managing Director, John Hirst, at today’s annual meeting held in Auckland

Nuplex Industries is forecasting an increase in profit of 20% to $25 million for the current financial year and is investigating setting up a resin manufacturing operation in China.

At today’s annual meeting the Chairman, Fred Holland, told shareholders that following “steady trading conditions” in the first quarter, “the mid point of our expectations is $25 million net surplus in this financial year”.

He reported an “underlying strength of demand” in Australia and New Zealand, an “apetitite for growth” in Vietnam, and “annualised synergies” emerging from the Australian acquisition, Asia Pacific Specialty Chemicals Ltd.

Factors which made accurate forecasting difficult were reporting in New Zealand dollars, when 75% of the company’s sales were made offshore in US and Australian dollars given the fluctuating exchange rate these currencies have with the NZ dollar, and the vulnerability of the company to sudden spikes in global petrochemical pricing.

Mr Holland told shareholders that Nuplex was the largest producer of resins for coatings in Australia, Vietnam and New Zealand, and also the largest provider of materials to the composite ( or fiberglass ) and paper industries in Australia and New Zealand.

The key to Nuplex’s success in the past decade he said was overseas investment, which had seen revenue grow from $115 million to $632 million, shareholder equity from $56 million to $157 million, earnings per share from 20 cents to 34 cents, and dividends from 10.5 cents to 20 cents.

He commented on the market’s recognition of the company’s significant growth, and the increase in share price since the last annual meeting from $3.25 to $4.20.

Managing Director John Hirst said that Nuplex’s entry into Asia was a success story.

Current exports to Asia from New Zealand and Australia were in the region of $20 million.

The company now had six years’ experience as a manufacturer in Vietnam, and sales from this operation exceeded $15 million in the last financial year. The modern plant had the capability to triple last year’s output in volume terms.

These factors, coupled with two years’ sales experience in China from its own representative office, had put Nuplex in the position where it could proceed “confidently but cautiously” in terms of investing in China.

“The cost of investing in a resin manufacturing plant in China is relatively low and would be within the ability of Nuplex to service.

Accordingly, we are currently investigating investment opportunities.”

Among the reasons he listed for setting up in China were:

a need to grow the company’s resin business to support needed future technology investment China’s importance as a principal supplier of materials to existing Nuplex operations and the ability to supply Asian markets more competitively than from Australia and New Zealand should future exports be threatened by competitors, especially those established in China.

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