Shares of Nuplex rise as it lifts full-year guidance on better-than-expected second half

Shares of Nuplex [NZX: NPX] climbed 5% to a 13-month high after the specialty chemical maker lifted guidance for its full year earnings on the back of strong performance in Europe, growth in its Asia and North America markets and improvements in Australia and New Zealand.

The company's shares rose 17c to $3.55 the highest it has been since March last year. The Auckland-based company now expects operating earnings before interest, tax, depreciation and amortisation to be between $130-134 million in the 12-month period ending June 30, up from its February guidance range of $115-125 million, and above the $125.7 million it reported in 2014.

Nuplex has been cutting back its operations in Australia and New Zealand, where a weaker performance is weighing on growth in Asia, America and Europe. In November it sold its Australasian agency and distribution business Nuplex Specialties and its plastic additives business Nuplex Masterbatch for $A127.5 million as it focuses on its global resins business. It used the sale proceeds to reduce debt and plans to buy back as much as 5% of its shares.

The lift in guidance came from a better than expected performance in Europe as well as a turnaround in profitability in its Australia-New Zealand business, with sales margins improving, Nuplex said.

"Nuplex's ebitda-to-sales margin is ahead of management's forecast as a result of the benefits flowing from the global procurement programme, lower raw material costs and group-wide lower operating costs," Nuplex chief executive Emery Severin said. "It is also due to the turnaround in profitability in the A-NZ business where the ebitda-to-sales margin has continued to improve following the restructure undertaken over the past few years. During the second half of the 2015 financial year, market conditions in Europe have been better than expected as a result of activity in the automotive original equipment and manufacturing sectors. Asia and North America have seen steady growth as expected. In A-NZ, as anticipated, market demand has been relatively flat."

The company expects ebitda growth across all its regions, with its Europe, Middle East and Africa region expected to lift earnings between 18-23% percent in local currency terms compared to a year earlier, Asia to be up between 15-20%, and the Americas to increase earnings between 5-10%. Its restructured Australia and New Zealand operations unit should lift earnings between 23-28%.

(BusinessDesk)