Nuplex Industries Limited
Results announcement to the market
Reporting period 12 months to 30 June 2011
Previous reporting period 12 months to 30 June 2010
Amount (000s) Percentage change
Revenue from ordinary activities $1,575,014 up 7.9%
Profit from ordinary activities after tax attributable to security holder
$67,968 down 4.9%
Net profit attributable to security holders $66,543 up 3.6%
Interim/Final dividend Amount per security Imputed amount per security
Final
11.0 cents per share
0.0 cents per share
Record date 30 September, 2011
Dividend payment date 7 October, 2011
Comments Unusual (gains)/losses after tax for the current year
comprise:
NZD ''000
Nuplex Resins LLC waste water discharge legal provision 457
NZ Securities Commission legal costs provision 229
Earn-out provisions 739
Total unusual losses after tax 1,425
NZX/ASX release 22 August
2011
Nuplex financial results for the 12 month period ending 30 June 2011
Growth
NZ$ millions FY11 FY10 Actual FX Constant FX
Sales revenue 1,575.0 1,459.9 7.9% 10.6%
EBITDA 130.9 139.4 (6.1)% (3.1)%
NPAT 66.5 64.2 3.6% 7.5%
Earnings per share (cents) 34.2 33.7 1.5% -
Dividend per share (cents) 21.0 21.0 - -
Global resins manufacturer Nuplex today reported net profit after tax (NPAT)
of $66.5 million for the 12 months ended 30 June 2011, up from $64.2 million
recorded in the same period last year.
Nuplex CEO Emery Severin said: "Overall this is a solid result. It highlights
the strength and diversity of both our global Resins footprint and our
Australasian Specialties business to deliver solid returns during a
challenging operating environment.
"We were able to deliver earnings similar to the record result of 2010
despite rapidly rising raw material costs, weak Australasian economic
conditions and a higher New Zealand dollar. Pleasingly, we also made
significant progress in putting the foundations in place to take Nuplex to
the next stage of performance and growth."
Earnings before interest, tax, depreciation and amortization (EBITDA) were
$130.9 million, 6.1% lower than the $139.4 million achieved in the record
2010 financial year. At a constant foreign exchange rate, using the prior
period average exchange rate, EBITDA was $135 million or 3.1% lower than last
year''s result. This result also includes a restructuring charge of $3.6
million.
Resins segment sales rose 8.8% from $1,170 million to $1,273 million while
EBITDA was down 10.4% from $120 million to $107 million. Sales were driven by
volume growth of 3.5% and increased selling prices to recover rising raw
material costs. A higher New Zealand dollar accounted for 4% of the decline
in EBITDA.
"In our global coatings resins operations, the largest business within our
Resins segment, stronger volumes, particularly in Europe and the Americas,
were offset by the lag in the recovery of raw material costs.
"We recovered over 90% of these higher raw material costs through price
increases implemented during the year - a pleasing outcome given some raw
materials rose by 20% to 35% and our raw material costs increased on average
by 13% over the period. We continue to work on recovering the remaining cost
lag in the new financial year.
"Year on year, the major impact on the Resins segment result was due to
lower volumes in our Australasian non coatings businesses. Demand for
composites, paper and ink resins as well as construction products were all
impacted by weaker consumer demand, lower construction and manufacturing
activity and strong local currencies.
"Our Specialties segment performed strongly. Sales rose 4.1% from $290
million to $302 million and EBITDA rose 20.2% from $19.5 million to $23.4
million. With sales to over 25 different industries, our Specialties segment
continued to benefit from its broader exposure to the Australasian economy.
"Meanwhile we made good progress in relation to setting our strategic
priorities, improving safety and maximizing the efficiency of the business
through project NuLEAP, our three-year program to deliver a step change in
the performance of the group.
"As the first year on a three year journey to take Nuplex to its next stage
of performance and growth, the foundations laid this year will provide a
strong base upon which we will be able to build in the coming years."
Safety
Nuplex''s commitment to its safety vision of ''Zero Harm'' continues. Over the
past 12 months there was a 30% improvement in the lost time injury frequency
rate (LTIFR) and the total injury frequency rate (TIFR). The LTIFR was 1.25
per million hours worked, down from 2 and the TIFR was 12.8, down from 17.6.
NuLEAP
During the year, NuLEAP initiatives identified as ''Quick Wins'' delivered over
$3 million in savings net of consulting costs. Planning and development of
larger initiatives is underway and expected to deliver approximately $10
million of incremental benefits in the next financial year. Longer term,
NuLEAP remains on track to deliver in total, approximately $30 million in
benefits by the end of FY2013, with the aim of improving Nuplex''s
EBITDA/sales margin towards its target of 12%.
Asian capacity expansion
During the year, Nuplex continued its program of investing in capacity in
high growth markets with the commencement of expansion projects in Vietnam
and China. The two projects are expected to increase Nuplex''s Asian resins
capacity by approximately 50% within the next three years.
The Vietnamese expansion will double the site''s waterborne capacity and is
progressing on time and in line with its budgeted cost of USD$7.5 million.
First production is expected in the second half of the 2012 financial year.
In China, a new site has been located and secured in Changshu (west of
Shanghai). The permitting and design phase of this project is now well
underway. Construction will begin towards the end of the second half of the
2012 financial year and first production is expected in the second half of
the 2013 financial year. The total cost for the project is expected to be
USD$35 million. This site will double Nuplex''s Chinese capacity and introduce
the ability to produce water based resins in China.
Meanwhile, we are actively pursuing a new site in Southern China.
Research and Development
Throughout the year a number of new and improved technologies were launched.
Two key technologies were recently released in March, at the 2011 European
Coatings Show in Nuremberg, Germany.
The first was a water borne resin to be used in brush and roller applied
decorative coatings, as well as joinery and wood coatings. The leading edge
technology used in this resin, increases the length of time that the paint
can be retouched without leaving brush strokes by approximately 50%. This
improves the appearance of surfaces that are touched up as well as making it
easier to use.
Nuplex''s leading market position in Sag Control Agents (SCA) used within the
Automotive OEM resins market was further strengthened by the release of its
new, "Strong" Sag Control Agent. When added to a resin used in the
formulation of a coating, SCA''s allow the coating to be applied on vertical
surfaces without it sagging as it dries. The benefit of this new technology
is that it also enables the coating to evenly cover sharp edges, improving
the appearance and reducing the risk of corrosion on metal edges.
Both products were well received and are currently being reviewed by
customers. Initial sales of both products are expected within the 2012
financial year.
Balance Sheet
The balance sheet remains strong and flexible with the gearing ratio, as
measured by net debt to net debt plus equity, of 11.7%. At this level of
gearing, Nuplex is well placed to undertake strategic, value creating M&A
activity if such opportunities arise.
Working Capital
Working capital as a percentage of sales held constant year on year, despite
rapidly rising raw material costs.
Funding
Subsequent to year end, Nuplex completed the renegotiation of its bank
facilities through to August 2014, and reduced the total available facilities
from AUD$300 million to AUD$200 million. These new facilities will deliver
annualised savings of $4 million pre tax assuming the current level of debt.
Reducing the total facilities available brings them into line with the
expected organic growth needs of the business, including the funding of the
Asian capacity expansion projects.
Dividend
Having reviewed the Company''s dividend policy, the Board expects to pay
dividends in the range of 55-65% of profits attributable to shareholders,
subject to funding requirements for organic growth and acquisition activity.
Nuplex Chairman, Rob Aitken said "This dividend payout ratio range is
consistent with what Nuplex has delivered historically to shareholders, and
reflects the ability of Nuplex''s operations to generate strong cash flows."
The Board has declared a final dividend of 11 NZ cents per share. Taking into
account the interim dividend of 10 NZ cents per share, the total dividend for
the 2011 financial year of 21 NZ cents per share was in line with the full
year dividend paid in 2010, when Nuplex delivered record earnings. The final
dividend will be franked at 60% for Australian shareholders, but will not
carry any New Zealand imputation credits.
With the funding available to meet Nuplex''s operating and organic growth
needs, the Board has decided to suspend the Dividend Reinvestment Plan with
respect to this dividend payment. The dividend will be paid on 7 October
2011, to all shareholders on the register on 30 September 2011.
NZ Securities Commission
As announced earlier in the year, the dispute with the New Zealand Securities
Commission (NZSC) was settled. An independent committee of Nuplex directors
concluded that a settlement was in the best interests of shareholders.
As part of the settlement, Nuplex agreed to provide a sum of up to $3.055
million to compensate shareholders who acquired and retained shares between
December 22, 2008 and February 18, 2009. A full provision for settlement with
the NZSC was made at the half year. The total cost to Nuplex was $1.5
million, with an impact of $229,000 in FY2011.
Outlook & Priorities
Commenting on the outlook, Mr Severin said: "Whilst the impact of recent
financial market volatility on general economic activity is still unclear,
given our products are inputs into goods used in everyday living and our
operations are geographically diversified, we have a sound position from
which to operate.
"Looking around the world, in Europe we are predominantly exposed to the
better performing northern European economies, whilst in the US our resins go
into consumer durables. In Asia, we are more focused on domestic end-use
markets than export related manufacturing, whilst in Australia and New
Zealand, we are exposed to a diverse mix of industries.
"Despite the near term uncertainty, we remain focused on those elements we
can control.
"Through focusing on our priorities of safety, NuLEAP, cost control and
margin management, product development through innovation, and our capacity
expansion projects in Asia we will continue to work towards improving our
operational performance and delivering future growth" Mr Severin said.
Ends.
For further information, please contact:
Josie Ashton, Nuplex Investor Relations, +612 9666 0342 or +61 416 205 234
Nuplex Industries Limited is a leading global manufacturer of polymer resins
with operations in ten countries on four continents and sells its products in
over 80 countries. Polymer resins are essential ingredients in a wide range
of products used every day, from basic necessities, through consumer durables
to luxury goods. Nuplex also distributes raw materials to a wide cross
section of industries in Australia and New Zealand including the chemical,
plastics, general industrial, food and pharmaceutical sectors.
Webcast
Further details of Nuplex''s 2011 full year results are set out in the
following pages. Nuplex will webcast a results briefing at 12.30pm NZST
(10.30 am AEST) today. The webcast will be available both live and archived
at www.nuplex.co.nz. Nuplex will post presentation materials on its website
prior to the webcast briefing.
Review of financial results for the 12 months ended 30 June 2011
Operational Segment Review
RESINS
NZ$m Growth (%)
FY11 actual FY11 at prior
period FX rates FY10 actual Actual Constant
Sales revenue 1,272.8 1,319.8 1,169.7 8.8% 12.8%
EBITDA 107.4 112.2 119.3 (10.4)% (6.4)%
Table 2: Resins results by region in local currencies
30 June 2011 30 June 2010 Growth (%)
Sales revenue
Australasia (AUD million) 354.8 365.1 (3)%
Asia (US$ million) 193.8 160.0 21%
Europe (Euro million) 228.5 181.0 26%
Americas (US$ million) 108.2 88.0 23%
EBITDA
Australasia (AUD million) 19.9 30.3 (34)%
Asia (US$ million) 21.5 23.5 (9)%
Europe (Euro million) 21.5 17.8 21%
Americas (US$ million) 10.6 9.3 16%
Coatings
Globally, sales were up 8.8% for the period, driven by 2.5% volume growth and
price increases implemented throughout the year to recover rising raw
material costs. Reported EBITDA was down 10.4% compared with the prior
period. A stronger New Zealand dollar accounted for 4.4% of this EBITDA
decline.
In Australasia, coatings resins volumes, whilst positive, were softer than
expected due to weak economic activity which was exacerbated by natural
disasters. EBITDA was impacted by margin pressure due to increased
competition from imports and increased demand from consumers for lower cost
products.
Volume growth for Asia was effectively flat as the region continues to
operate at near full capacity. Whilst price increases were implemented
throughout the year, the lag in raw material cost recovery combined with wage
cost increases impacted EBITDA for the period.
In Europe, sales were driven by a combination of raw material price recovery
and volume growth. Volumes returned to pre GFC levels driven by strong demand
from the northern European economies. Nuplex''s UK based, powder resins plant
delivered a record volume year reflecting increased demand for powder
coatings used on construction related products and automotive parts. EBITDA
benefited from increased NuLEAP cost savings achieved during the period.
The American business experienced sales growth reflecting both steady volume
growth and increased selling prices implemented to recover rising raw
material prices. Volume growth was predominantly driven by the manufacturing
sector''s increased demand for high end metal coating resins. A number of
NuLEAP initiatives were delivered in the second half, their cost benefit
positively impacting EBITDA.
Despite some wage inflation in Asia, non raw material costs were tightly
controlled, and remained in line with the previous period.
Composites, Paper & Ink, Building Materials & other
Over the past 12 months, composites volumes were impacted by reduced demand
conditions as a result of wet weather, continued consumer spending restraint
and fewer infrastructure projects in the 2010 financial year. Additionally,
given the strength of the Australian and New Zealand dollars, increased
import competition and reduced domestic manufacturing activity placed further
pressure on demand.
Reflecting Nuplex''s expectation that challenging conditions will remain for
some time, a restructure of this business was announced in May 2011. The
rationalistion of Nuplex''s three composite brands into one Nuplex Composites
business will better align this business'' cost base with its revenue
opportunities. Following the restructure, this business will be increasingly
focused on pursuing growth in the South East Asian region.
The acquisition of Fibrelogic Pipe Systems, via a 50:50 joint venture with
RPC Technologies has been completed. Fibrelogic manufactures wide diameter
pipes used in the growing water and mining infrastructure segments and
Nuplex''s Australian composites operations are expected to benefit from the
long term supply agreement with the joint venture company.
SPECIALTIES
NZ$m Growth (%)
FY11 actual FY11 at prior
FX rates FY10 actual Actual Constant
Sales revenue 302.2 296.6 290.2 4.1% 2.2%
EBITDA 23.4 22.8 19.5 20.2% 16.9%
Sales growth was driven by increased sales in the majority of the industries
into which the Specialties businesses services. Sales to the Food & Nutrition
industries were particularly strong as a result of the MedChem acquisition in
FY2010. The restructure of the Specialties management team, and the continued
focus on delivering efficiencies, contributed to delivering strong EBITDA
growth over the year.
ALSO ATTACHED TO THIS RELEASE ARE THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
30 JUNE 2011 TOGETHER WITH A COPY OF THE ASX APPENDIX 4E
End CA:00212676 For:NPX Type:FLLYR Time:2011-08-22 09:48:29