NPX - Earnings Guidance
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Nuplex Industries Limited (NPX) | 9:37 am, Tuesday 25 November 2008 | NPX | 1.470 |
 -0.060 |
(-3.92%) |
At the recent Annual Meeting, advice was given that demand had softened since August and that full year results would be dependent upon how long demand was constrained. With the first quarter result only slightly below prior year, and no undue pessimism from major market segments for mid term expectations, the outlook was for a weak first half and moderate second half of the 2008/09 financial year.
Since this announcement, we have seen a significant turnaround in both demand and confidence across world markets. Results for October were below what had been anticipated at the time of the Annual Meeting and there has been no recovery during November. A continuation of this pattern will see full year results fall short of our previous expectations.
Current sales are believed to be artificially low as the market adjusts inventory levels to new demand patterns to conserve cash. Customers are also holding off placing orders in an expectation of lower pricing driven by both weak crude costs and the effect of supply substantially exceeding demand. Higher cost inventories will, however take some time to work through the system. It is not therefore possible to predict fully the likely demand pattern upon which to estimate performance. However, lower raw material costs and efficiencies which will have an effect from the second half, together with further initiatives to minimise cost and conserve cash, will have a positive impact.
Based on visibility from results through to October and current indications of November our forecast EBITDA for H109 is now in the range NZ$45 – 50 million. Taking into consideration an improvement in customer buying patterns together with the early impacts of efficiencies and other cost reduction actions, we anticipate EBITDA for H209 to be in the region of NZ$60 million.
While future demand remains the great uncertainty and outside the company’s influence, the fundamental businesses remain sound and well positioned to take advantage of the upturn when it comes.
Most of the company’s credit facilities which were due to mature in November 2009 are being extended with existing banks. Credit approvals have been received for AUD200 million to mature in November 2011, AUD100 million in November 2010, with negotiations for the balance of AUD50 million still to be concluded. Despite the downturn in performance Nuplex remains in compliance with the financial covenants of its funding facilities.
For further information please contact;
John Hirst Graeme Storey
Group Managing Director CFO & Company Secretary
+61 417 133 334 +64 0 580 0876
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