NUPLEX INDUSTRIES LIMITED 2010 ANNUAL MEETING
3 NOVEMBER 2010
THE CHAIRMAN''S ADDRESS
At the last annual general meeting, I reported on a year that could best be
described as tumultuous. I finished my chairman''s address by saying that,
while there would be more challenges to overcome, I was confident the company
would prosper as economic conditions continued to improve.
I am very pleased to be able to report today that, while markets remained
volatile and difficult, the 2010 financial year was a record year for Nuplex.
Your company''s profit was the highest in our 54 years on the New Zealand
Stock Exchange, demonstrating the inherent strength of our core businesses,
customer relationships and global market positions.
Sales volumes of manufactured resins increased by 11% and total revenue in
local currencies was higher than the previous year, with particularly strong
performance in both Asia and Europe. The strength of the New Zealand dollar,
however, reduced reported sales revenue which - at $1,459.9 million - was
Earnings benefitted from effective margin management and ongoing
re-structuring, as well as from the increased demand. Earnings before
interest, tax, depreciation and amortisation - or EBITDA - grew by 52.3% to a
record $139.4 million, after non-recurring costs of $9.2 million principally
related to restructuring. As with sales revenue, reported earnings in New
Zealand dollars were affected by the dollar''s strength compared with the
previous year, and at FY09 exchange rates the EBITDA increase would have been
Net profit after tax was $64.2 million, a major turnaround from $16.7 million
in FY09. This was after unusual items totalling $7.2 million, compared with
$6.9 million in the previous year.
These items included an impairment charge on the Seven Hills, Sydney site,
remediation provisions, costs resulting from a US spill, and defence costs
following the New Zealand Securities Commission proceedings, which I will
talk more about shortly.
Net interest, including facility fees and the cost of interest rate swaps,
was $18.9 million; this cost is expected to decline in future years in line
with lower debt levels and as the swaps program expires. The company''s tax
rate was 23% compared with 30% in FY09, due to the significant proportion of
earnings in Asia and utilisation of tax losses in China that had not been
The company''s bank facilities, totalling AUD300 million, were extended during
the year to 31 March 2012. Operating cash flow was again strong at $104.7
million, with continued focus on working capital management resulting in a
lower ratio of working capital to sales. Gearing, measured as net debt to net
debt plus equity, fell to 12% from 20% at 30 June 2009 due to the strong
operating cash flow and relatively low expenditure on acquisitions and
Earnings per share increased to 34 cents, and a final dividend of 11 cents
was paid to shareholders last month. This brought total dividends for the
year to 21 cents, compared with 8.5 cents for 2009, representing 56% of
operating profit after tax. Neither dividend carried imputation credits for
New Zealand shareholders, although Australian shareholders benefitted from
partial franking. The dividend re-investment plan applied to both the interim
and final dividends, with shareholders representing 44% of our issued shares
choosing shares rather than cash for the final dividend.
I am pleased to note that, as Nuplex''s financial performance has improved and
as a result of embarking on a program to raise awareness of Nuplex in the
Australian and Asian investment community, investors have become increasingly
confident of your company''s prospects and the share price has risen
considerably during the year.
The percentage of shares held outside New Zealand has increased to nearly 25%
from 20% in December 2009; this overseas interest is particularly significant
as, if it continues to grow, the valuation gap between Nuplex and its global
peers may narrow.
Board and Management
Turning now to the board and management of the company.
Over the past few years the board has been working through an orderly
director renewal program to ensure that the board has the appropriate balance
of skills, experience and industry knowledge for the proper governance of the
company. This is particularly important given the global and technical nature
of the Nuplex businesses and that future growth is likely to be outside
Australia and NZ.
The board believes that it is in the best interests of all shareholders that
board succession and renewal happens in a timely, orderly way to ensure that
corporate memory, experience and the right mix of skills and competence are
present on the board at all times. Your directors work well together and I
thank them for their valuable counsel during the past year.
Later in the meeting, Barbara Gibson and I are standing for re-election as
non-executive directors of your company. Your longest serving director,
Michael Wynter will retire at the 2011 AGM, and the board is currently, as
part of its annual review process, undertaking a skills audit to determine
the key attributes that his successor should have prior to commencing a
search process early next year. The Directors have reviewed the number of
directors on the board and believe that at the company''s current size the
board and committee workload is quite manageable with a complement of 6
directors. Any significant increase in the size of the company will warrant a
subsequent review of board size.
Given the global nature of the Nuplex business and in particular the likely
location of future growth, the board considers as a pre-requisite that all
directors must have had significant experience working and ideally living in
markets outside Australia and NZ.
As anticipated at last year''s meeting, John Hirst retired from Nuplex at the
end of the financial year, following 43 years with the group, including nine
years as group managing director and CEO. I would like to thank him again on
behalf of all shareholders for his enormous contribution to the company,
driving its transformation through organic growth and acquisitions into a
significant global resins group. It is appropriate that in John''s final year
the company should produce a record profit, reflecting the operational
excellence and strong culture of customer service that he championed.
I am delighted to welcome Emery Severin to his first Nuplex annual general
meeting and would like to take the opportunity of formally introducing him to
shareholders. Emery joined the company on 12th April 2010 and succeeded John
as managing director and CEO on 23 April. Before joining our company, Emery
was president of Boral Industries, Inc. based in Atlanta and previously was
executive general manager of Boral''s Australian construction materials
business and a senior executive with BHP. He has a Bachelor of Science
honours degree in chemistry and physics from the University of New South
Wales, and was a Rhodes Scholar at Oxford University, completing a doctorate
of philosophy in physical chemistry.
Emery has extensive experience of building international businesses through
organic growth and acquisitions and the board is confident that, with his
strategic and commercial skills and proven leadership in competitive
environments, he is ideally suited to lead Nuplex during its next phase of
Emery has already moved to make several senior appointments so that we have
the skills to continue to grow the company. He has also commenced a review of
the company''s strategy and launched a major productivity improvement program
and he will talk further about these initiatives and his future plans for the
company during his address.
Let me now touch on the board''s approach to remuneration. The volatile and
competitive market in which Nuplex operates creates a challenging environment
in which to properly motivate and remunerate our workforce and the board has
worked to balance this need and the expectations of shareholders.
In response to shareholders'' requests to have a significant component of
executives'' remuneration "at risk", remuneration packages at most companies
generally consist of a base salary plus a short term incentive (or STI) and a
long term incentive (or LTI) where performance at target or budget level
normally delivers the base salary plus 50% of the short term incentive
potential and 50% of the long term incentive potential. This is the case at
Nuplex. Today we will invite you to approve a new long term incentive plan,
the Nuplex Performance Rights Plan, to motivate senior managers to deliver
very significant improvements in the company''s performance.
Importantly the performance rights plan has two hurdles. The first is an eps
or earnings per share hurdle and the second is relative total shareholder
return - each represent 50% of the maximum long term incentive potential for
each executive. The board believes these two hurdles align management rewards
with actual shareholder returns.
The starting point for the earnings per share performance hurdle is the
record earnings per share result achieved in the 2010 financial year. In
short, the company needs to deliver growth in earnings per share in excess of
6% per annum compounded over 3 years above the FY10 result before any award
of shares will be made to any executives. To achieve the maximum outcome,
growth in earnings per share of 16% per annum compounded over 3 years must be
achieved; that is, earnings per share needs to grow at least 56% from 34
cents to 53 cents or higher.
The second hurdle is total shareholder return relative to the companies in
the NZX50 index at 1 July this year. Vesting commences after 3 years for
performance above the 40th percentile with a maximum outcome for top quartile
or greater than 75th percentile performance.
I would now like to talk briefly about the New Zealand Securities
Commission''s proceedings. In April 2010, the commission announced that it
intended to issue proceedings against Nuplex and certain past and present
directors, alleging non-compliance with the company''s continuous disclosure
obligations in late 2008/early 2009.
In late 2008, as you will recall, the global financial system almost
collapsed and had to be propped up through intervention by governments in
Many sound manufacturing companies were concerned that their bank covenants
contained ratios that might become impractical as the global financial crisis
affected their markets. Nuplex was one of these, and accordingly towards the
end of 2008 we opened discussions with our banks to loosen or waive covenant
The board is confident that the actions it took to deal with the crisis -
including amending bank covenants, raising capital, restructuring operations
and improving earnings - preserved and promoted shareholders` interests. The
directors concerned and the company at all times acted with full cognisance
of the relevant legislation, stock exchange requirements and accepted
commercial practice and we are entirely confident of our and the company`s
position. It is therefore regrettable that the directors and Nuplex have been
subjected to proceedings which are not in the shareholders` interests and
which it is estimated will cost the company a sum in excess of $1.3million to
Safety, Health and Environment
The welfare of our people and care of the environment are key priorities for
every Nuplex business, and during the year your board established a committee
to oversee the development of health, safety and environmental programs, and
compliance with all legislation and regulation.
Our goal is zero harm to our people and the environment and communities in
which we operate. I am pleased to report that the lost time injury frequency
rate fell during the year to 2.1 lost time injuries per million man hours
worked. This was a 38% reduction from the previous year and there were no
lost time injuries at 18 of our 22 manufacturing sites. Regrettably, there
was an increase in total reportable injuries and we are determined to reverse
this in the current year.
There was significant progress with reducing the group''s environmental
impact, with our greenhouse gas emission rate continuing to fall and
reductions in our energy and water consumption rates. Unfortunately, there
were two spills during the year - one in the United States and one in
Australia - and the board will continue to monitor actions that have been
taken to prevent a recurrence. Following the US spill, an action which
purports to be a class action has been commenced against Nuplex and the
former owner of the site.
The plaintiffs in that case have yet to specify the details of their claim or
to substantiate a class, and the company is vigorously defending the matter.
I would now like to talk about your company''s domicile which, as I mentioned
at last year''s annual meeting and again in the Annual Report this year, the
board has been considering.
In the interests of good governance, the board of Nuplex is continually
looking at ways to increase shareholder value. In this context, the board has
been considering whether a change in the company''s domicile, whilst retaining
listings on both the NZX and ASX, would be in the interests of shareholders.
I dare say that you could accuse the board of not fulfilling its obligations
if the board did not consider this option.
This review has been going on for some years and is likely to go on for some
time to come. It is not a top priority for the company because, firstly, many
of the perceived benefits will take some time to realize and secondly,
because the issue is more about positioning Nuplex for tomorrow rather than
the Nuplex of today. By this I mean that what is driving the directors
interest is primarily the ability to secure equity funds at lowest cost in
order to fund some of the significant growth plans that we have.
But, let me confirm three facts:
1. The board''s review is incomplete and will require a lot more research
2. Any recommendation on a change in domicile, essentially a change in
location of the registered office of the company, will be required to be put
to a vote by shareholders,
3. The board has no plans to make a recommendation at this stage.
Our responsibility as a board is to you, our existing shareholders. If we
decide to recommend a change of domicile, it will be because we believe it
will be in the interest of all shareholders. Should this be our view, the
board will be obliged to put it to shareholders and you will be asked to
support it at a general meeting. The final decision, therefore, will be with
you our shareholders. I have kept shareholders informed of our review in the
interests of transparency and to avoid the development of rumours as we
consult with stakeholders, and will continue to do so.
And now to the future.
Your company has a strong balance sheet, sound cash generating businesses and
sustainable earnings based on volume growth and cost control. Our operations
span developed regions, where we have established market positions, as well
as the fast growing countries of Asia which offer substantial potential
albeit still from a relatively small base.
Our focus now is on improving the productivity of our existing operations and
investing in growth opportunities, both organic and through acquisition.
These will include increasing capacity in certain markets, particularly China
and Vietnam in the short-term, and penetrating new and existing markets with
products based on exciting new technologies.
Nuplex has made great progress in the past 18 months and is now a far
stronger company. While performance in 2011 will depend upon economic
activity in our markets, I am confident that our group is well placed to
prosper as economic conditions continue to improve.
I will now hand over to Emery who will summarise our performance during the
past four months and will also give you his initial thoughts on the
opportunities he sees for the company.
MANAGING DIRECTOR''S ADDRESS
Thank you Chairman, and good morning ladies and gentlemen. I am honoured to
have the opportunity to lead this great company.
A question I have been asked many times since I took up my role in April is
whether I have come across any surprises. I am pleased to report that the
answer is no. I have been greatly impressed by the strength of Nuplex''s
market positions and customer relationships, our research and development
capabilities, and the skills of our people around the world. The company is
sound financially and its strong cash flow and low debt will enable us to
take advantage of growth opportunities, while providing security if there is
another economic downturn.
I have also been impressed by the energy and dedication of our team in
steering Nuplex through one of its toughest periods. The record profit in
2010 is, I believe, one of the company''s most significant achievements in its
long history and a testament to the pro-active stance that management adopted
nearly two years ago to counter the global financial crisis.
This morning, I intend to summarise the performance of our two divisions and
our four geographic regions during 2010. Then I will give some insights into
our plans for the future and provide an update on first quarter trading
conditions and guidance for the 2011 financial year.
First, Resins which accounts for around 80% of total revenue, with coatings
resins providing more than 60% of total revenue.
Raw material prices, which are our largest cost, were extremely volatile
during the year. In the first half, they softened and we reduced selling
prices accordingly. In the second half, raw material prices increased
substantially, but good margin management enabled us to recover most of these
Overall, while the division''s sales revenue was slightly lower, margins
improved to more acceptable levels - around 10% EBITDA to sales - and
earnings increased by 63% in New Zealand dollars.
In Australasia, a modest improvement in sales volumes of coatings resins in
Australia was offset by a decline in New Zealand, where our business was
affected by the weak economic activity, but earnings in the region increased
by 41%. We embarked on an aggressive program to cut costs and launched a
number of innovative products to reduce our reliance on traditional products
and markets. Importantly, working capital was reduced as a percentage of
sales and delivery times improved.
Exports from both New Zealand and Australia increased, mainly to support our
Asian businesses, and we received new orders for our high-performance
water-based products from China and other Asian countries.
The composites business suffered the most from the economic crisis as many of
its end products - such as swimming pools and boats - are discretionary
purchases. However, government spending on infrastructure projects - such as
desalination plants and water pipelines - increased demand for large diameter
Our paper business had a strong year, driven mainly by new products, but
sales by our construction products business were flat.
In Asia, there was strong demand across the region. In US dollars, sales
grew by 25% and earnings by 62%. Volume growth was fueled by domestic demand
for consumer durables and buoyant construction activity.
Our operations in China performed extremely well on the back of the strong
economy and, in particular, a robust automotive industry. While the rate of
growth slowed in the fourth quarter as the government reined in the economy,
increasing domestic demand offers us great opportunities for future organic
Volumes in South-east Asia recovered to pre-crisis levels, particularly in
Vietnam and Malaysia.
Most of our Asian businesses are now operating at or near full capacity and
further growth will come from building additional capacity in Vietnam and
China and introducing new products and technology.
In Europe, there was a significant turnaround during the year, driven by
recovery in core markets including automotive, vehicle refinishing and
metals. Volumes increased by more than 15%, although they still lagged
pre-recession levels. In euro, revenue increased by 14%, with earnings up
250% due to margin improvements and cost reductions.
In response to the global financial crisis, we restructured our European
operations with assistance from the Netherlands government. This has now
been substantially completed and we have an efficient structure and
sufficient capacity to meet future demand.
The effects of the downturn were mixed, with Europe''s southern, central and
eastern countries - where we have limited exposure - most affected. In our
core markets of Germany, France and the Benelux countries, our sales
benefited from government stimulus programs and growth in exports to Asia.
In January 2010, EU legislation was introduced limiting the use of volatile
organic compounds. We introduced new, high-value-added products to our
customers in anticipation of this change, and these helped us to increase
margins and offset potential volume loss.
Sales by our American business were flat, but earnings in US dollars
increased by 43%, as we benefited from the full impact of the previous year''s
restructuring and from improved operational efficiency and product mix.
Future performance will depend on the state of the US economy and we are
monitoring employment growth for a sign of a sustained recovery; meanwhile,
our focus is on specialty markets such as the automotive and vehicle
refinishing industries and on improving margins.
Volumes in South America, where our operations are now limited to trading,
increased, with improved product mix.
And now to our Specialties business, which contributed 14% of group earnings
in 2010. As you are aware, Specialties has two main operations - Nuplex
Specialty Products, which is an agency and distribution business in New
Zealand and Australia, and Culamix, which manufactures masterbatch and liquid
colour products in Australia, New Zealand and Vietnam.
While sales were 4% lower, the business lifted its earnings by 9% through
increased margins, lower costs and improved efficiency.
Nuplex Specialty Products'' sales were affected by delays in receiving product
from overseas due to strong demand elsewhere, and by lower demand from
industrial sectors, especially in New Zealand where several customers closed
their manufacturing operations.
The food and pharmaceuticals markets, however, were more resilient and
overall revenue began to recover in the second half after a weak first half.
The business has embarked on an innovative program to import liquid chocolate
for a number of major customers and is looking for other opportunities in
Australasian industrial markets.
In March, we acquired the Med-Chem ingredients business which has
complementary agencies for New Zealand and Australia, and this made a
positive contribution in line with expectations.
Culamix grew strongly across all market sectors, especially packaging,
rotomoulding and synthetic building materials. Our Vietnam manufacturing
facility returned to profit following the fire in 2008.
One of Nuplex''s core strengths is our customer relationships, based on
quality and security of supply of products that are critical to customers''
businesses. These relationships are particularly important at a time when
customers are facing competitive pressures, tighter legislation and
regulations requiring low emission products.
About 10% of Nuplex''s total workforce is employed directly in technical
activities. They are located at our innovation centre in the Netherlands,
where we have a world-class research facility and at development and
technical facilities across our regions. We collaborate closely with our
customers to develop products that meet their changing needs, and about 80%
of our technology investment is focused on researching new products,
developing existing products and providing direct technical support to
customers. This also enables us to offer higher-value products and expand
into new product segments.
As an example, during the year we developed a range of environment friendly
polyester resins and gel coats with styrene content of less than 28%. These
have been tested successfully by a major swimming pool manufacturer in
Brisbane, and emission measurements showed a reduction of more than 50% in
atmospheric styrene levels, while the product maintained exceptional
handling, UV and chlorine resistant properties.
We also launched ultra-fast curing acrylic resins technology which enables
vehicle refinishers in the United States to buff clear-coats in 30 minutes
compared with the previous average of 6-18 hours. This provides considerable
economic advantages in terms of increased throughput and energy savings. A
variation of this product has been developed for the European market.
Other products introduced during the year include a water-based polymer in
Australia for interior wall paint with low odour and enhanced performance,
and environment-friendly water borne coatings to enhance the appearance of
wood furniture and protect it from everyday wear and tear. The latter are
increasingly replacing traditional solvent-borne coatings in Europe.
The chairman has referred to the importance we place on the health and safety
of our people and the company''s impact on the environment, and I would like
to emphasise that zero harm to our employees, customers and the environment
is a major priority for management throughout the group.
During the year, we made progress in improving our health and safety record
through increased focus on managing risk and creating a culture of awareness
among all our people. The lost time injury frequency rate fell to 2.1 from
3.4 per million hours worked, but more needs to be done and among our goals
this year is to cut total reportable injuries, which increased in 2010.
As I have already mentioned, much of our research and development is aimed at
helping our customers with the sustainability of their products, and we are
also focused on reducing the environmental impact of our own operations. I am
pleased to report that the group''s energy and water consumption rates, waste
generation rate and greenhouse gas emission rate all fell during the year.
An audit to identify energy consumption opportunities at our Botany plant in
Sydney is being extended to other sites this year; we have introduced a
plastic waste recycling program throughout our Culamix operations; and
rainwater collection tanks have been installed at Geebung in Queensland to
provide water for the site''s cooling towers.
At Penrose, we have installed sand and peat filters on our storm water
discharge outlets, reducing the risk of contaminants entering the municipal
system, and in Malacca, Malaysia we have commissioned a new wastewater
treatment plant. Seven of our sites in China, Malaysia, Indonesia, United
States, the Netherlands and the United Kingdom now have environmental
management systems certification to ISO14001 standards.
We co-operate at all times with regulatory authorities to ensure we remain in
full compliance with local laws, regulations and licensing conditions, and
all our sites maintained their operational certification during 2010.
As the chairman mentioned, we strengthened our team during the year with a
number of key management appointments. I would just ask that the members of
the Nuplex Executive Team stand up and make themselves known to you as I
mention their names.
First, Rob Harmsen was appointed chief operating officer, resins, responsible
for the group''s coating resins business and operations in Asia, Europe, the
Middle East, Africa and the Americas; and Sam Bastounas was appointed chief
operating officer responsible for our specialties businesses and the group''s
resins businesses for the coatings, composites and paper markets in New
Zealand and Australia.
Clive Deetlefs joined us as vice president, operations following the
retirement of Tony Cooke and he has overlay responsibility for Safety, Health
and Environment and manufacturing efficiency, as well as direct
responsibility for process control and plant design and construction. Since
the beginning of this year, we have also been joined by Paul Davey in the new
role of vice president, human resources and by Hasan Shafi as vice president,
corporate development and planning. Ian Davis and James Williams have already
been introduced to you, and in two weeks time Josie Ashton will join us in
the role of Group Investor Relations and Communications Manager. With the mix
of existing deep experience and the new appointments, I believe we have the
right team to continue to develop and grow our business.
Now to my initial thoughts on future opportunities.
I have spent my first few months gaining a thorough understanding of the
businesses in our four regions. I have met a broad range of customers and
visited all but two of our plants. As I mentioned at the beginning, I have
been greatly impressed by the strength of our international footprint and our
company''s potential to grow into an even more significant global group.
There is no doubt that Nuplex is in better shape than it was two years ago
when the impact of the global financial crisis on the company began to be
evident. Looking back, this was a unique opportunity to restructure and
re-position the group''s operations, and our results in 2010 demonstrate the
progress that has been made so far.
While margins returned to more acceptable and historic levels in 2010, I
believe we can do better and we strive to achieve margins comparable to the
better performing global specialty chemicals companies. With this goal in
mind we have now embarked upon a program aimed at making a ''step change'' in
all our operations. Named NuLEAP, this is collaborative, team-based process
that employs a rigorous, analytical, fact-driven framework which breaks down
each business by activity and benchmarks activities against global best
practice or theoretical limit of performance.
NuLEAP is being driven by two 16-strong internal teams, one for Australasia
and the other for the rest of the world, supported by a small cadre of
consultants who are very experienced in applying the process. We are
targeting a reduction in controllable costs, together with increased revenue
through new products and sales initiatives and improved capital efficiency
right across the company. The process to date has identified many
opportunities for business improvement that will enable us to change the way
we do things to deliver even higher standards of service to our customers and
to sustain or improve margins and profitability.
Some examples of the ideas that have been generated are cost savings by
rationalising the number of third party transport companies and warehouses
used by the various businesses in Australia; introduction of new cost
competitive, higher performance composite resins in Australia; extension of
our technical and product expertise in vehicle refinish and metal
applications into Eastern Europe; implementation of more efficient purchasing
practices globally; and undertaking a number of incremental investments to
de-bottleneck capacity-constrained plants in Asia.
The diagnostic phase has already been completed, and the teams are now
beginning to develop detailed implementation plans. We will commence
implementation in the new year and the program will be completed within two
years depending on the complexity of the ideas. We expect to start to see the
benefits flow in the 2012 financial year, with the full benefits impacting
I am delighted to say that NuLEAP has been received enthusiastically by our
management team. One consequence will be greater empowerment and
accountability throughout our operations, and NuLEAP will also provide tools
for ongoing continuous improvement, while still maintaining the group''s
entrepreneurial spirit which is a key to our success.
While NuLEAP is the activity that will create the most value in the short
term, we continue to seek avenues for growth in the medium to longer term. On
the medium term horizon we are very focused on growth in emerging markets as
well as developing new products for our customers in existing markets. We
have set ourselves specific targets for new product renewal over a rolling 60
month timeframe. As we have already mentioned, we have committed to expanding
our water-based resins capacity in Vietnam which should be completed in
around 12 months time. We are also actively seeking two new sites in China to
support growth from our established positions in Guangdong province in the
South and Jiangxi province in the East, where we are constrained by either
site or permit factors from further expansion. These will take around two
years to complete.
We are also looking further afield in China as the country rapidly
industrialises westward, as well as in India and Eastern Europe. In addition,
we have commissioned some strategy work to help us identify acquisition
opportunities in the specialty chemicals industry that may be complementary
and value-adding to our existing portfolio. Our sound balance sheet places us
in a good position to explore such options.
Now to current trading and our expectations for the remainder of this
Overall trading conditions during the first quarter have been similar to the
latter half of FY2010. There are still mixed signals coming from the global
economy and the coating resins markets. Europe has held up well, however
there are some signs of softening in the European auto sector, but we are
actively offsetting this by product developments in other areas. Volumes have
softened in South-east Asia and China, but indicators point to demand
increasing, especially in the auto sector in China. Demand in the US and
Australia has remained steady, while demand in New Zealand has been weak in
line with the general economy and reflecting a very wet winter. We are wary
of the historic high Australian and New Zealand exchange rates that may have
an impact on the business.
As markets improve, we have the capacity to benefit immediately from growth
in Europe, the US and Australasia. We can also support growth in Asia from
other regions until our expansion plans for China and Vietnam are completed.
Margins have generally held. An exception has been some lag in recovering
steep price increases in acrylic monomers across the globe. This lag affects
less than 10% of our coating resins business.
Consumer sentiment in Australia and New Zealand remains cautious, and the
composites business is not yet experiencing a recovery in demand to previous
levels. Trading in our Specialties business is at expectations.
Exchange rates continued to have an adverse effect on profits in New Zealand
dollars during the first quarter and it is difficult to predict how these may
impact results for the rest of the year as currencies continue to fluctuate.
Taking these factors into account, our forecast for FY11, based on average
exchange rates in the first quarter, is earnings before interest, tax,
depreciation and amortisation in the range NZ$135 million to NZ$145 million
and net profit after tax in the range NZ$68 million to NZ$75 million.
Finally, I would like to thank all members of the Nuplex team for achieving a
remarkable turnaround in 2010. As a result of their professionalism and hard
work, and the contribution of their predecessors, I have been handed the
reins of a company in good health - and it is a privilege, as your new CEO,
to have the opportunity to lead such a professional team.
ATTACHED TO THIS ANNOUNCEMENT IS A COPY OF THE SLIDE PRESENTATION FOR THE
ANNUAL MEETING. THIS CONTAINS DETAILS OF PROXIES RECEIVED FOR EACH OF THE
FORMAL RESOLUTIONS CONSIDERED BY THE MEETING.
End CA:00201864 For:NPX Type:ADDRESS Time:2010-11-03 09:33:22