NPX
24/09/2012 09:01
FORECAST
REL: 0901 HRS Nuplex Industries Limited
FORECAST: NPX: Streamlining Australian and New Zealand operations
NZX/ASX release 24 September 2012
Investing to streamline Australian and New Zealand operations
Nuplex Industries today announced the streamlining of its Australia and New
Zealand operations to align manufacturing capacity with future demand.
Nuplex CEO Emery Severin said Nuplex remains committed to its customer value
proposition of delivering cost competitive, innovative, quality products and
security of supply by continuing to manufacture in Australia and New Zealand.
The restructure will see the company consolidate and upgrade the efficiency
and flexibility of four of its existing sites: Penrose, Auckland; Botany, New
South Wales; Wacol, Queensland; and Springvale, Victoria. The sites at
Canning Vale, Western Australia, Wangaratta, Victoria, and Onehunga,
Auckland, will cease operating over the next two years. The high-temperature
plant at Penrose, Auckland will also be closed.
"Over the past eight months we have undertaken a review of the markets we
serve and made an assessment of how we can best supply our customers. It is
likely that demand levels in both the manufacturing and construction sectors
will be lower than in previous economic cycles as manufacturing customers and
their customers continue to move offshore due to the impact of the ongoing
strength of the Australian and New Zealand currencies. In construction,
whilst activity will recover at some point, demand conditions remain
subdued," Mr Severin said.
"We concluded that through streamlining our manufacturing network and
investing to maximize the capability of our remaining operations, we can
align our cost base to competitively produce our products in Australia and
New Zealand. Importantly, we will continue to maintain our market leading
positions in the region through our unique ability to manufacture a broad
range of products across our multiple sites.
"To ensure we can continue to meet our customers' needs, we will invest in
replacing and upgrading our waterborne reactors at Botany and Wacol and will
install additional capacity at Wacol to serve both coatings and composites'
customers. We have recently completed upgrading our solventborne capacity at
Botany, ensuring the needs of this market are fully met."
Mr Severin said Nuplex is very aware of the impact the changes will have on
affected employees however, the changes are necessary to ensure the long-term
sustainability of the business. The company will be consulting with affected
employees and their representatives over the next few weeks.
The full benefits of the restructure will be approximately NZ$5.6 million
pretax per annum, to be fully realised in the 2015 financial year. The
project has a net present value of NZ$10.5 million.
The progressive closure of sites over the next two years will incur
redundancy costs of NZ$3.95 million, write-downs of obsolete equipment of
NZ$8.05 million, and provision for site clean-up and remediation of NZ$4.35
million. The investment to upgrade the Australian sites at Botany, New South
Wales and Wacol, Queensland will be approximately NZ$13.0 million which will
be spent evenly over the next two years.
In the 2013 financial year, following the take-up of the restructure costs
and property remediation provisions, earnings before interest, tax,
depreciation and amortisation is forecast to be reduced by NZ$8.3 million.
As part of the overall review, the carrying value of Nuplex's investment in
the RPC Pipe Systems joint venture (the business previously known as
Fibrelogic) has been assessed. Due to the continued slowdown in
infrastructure programs and the uncertain short term outlook, the investment
will be written down by NZ$5.6 million.
In the 2013 financial year, as a result of the provisioning for restructure
costs and property remediation, as well as the write down of plant, equipment
and investments, net profit after tax is expected to be reduced by NZ$17.0
million. As a consequence of the provisions and writedowns, gearing is
expected to increase by 0.6% to 28.6%.
The restructure is expected to reduce earnings per share (EPS) in the 2013
financial year by approximately NZ 8.6 cents, of which approximately NZ6.9
cents is due to the impact of non-cash items. The restructure is forecast to
be EPS accretive by approximately NZ1 cent in the 2014 financial year and
approximately NZ 2.0 cents in the 2015 financial year.
For further information, please contact:
Investors :
Josie Ashton,
+612 8036 0906 New Zealand Media:
John Redwood
+64 21 838 088 Australian Media:
Amanda Buckley
+ 61 419 801 349
Nuplex Industries is a leading chemicals company which manufactures polymer
resins that enable adhesion and determine the performance and appearance
characteristics of coatings and structural materials. These polymers are the
backbone and binders of materials that are used in everyday products
everywhere. Nuplex manufactures in 11 countries and sells into more than 80
countries worldwide. Due to our unique position in Australia and New Zealand,
Nuplex is also a leading supplier of specialty chemicals and a market leader
in plastic colour and performance additives.
End CA:00227636 For:NPX Type:FORECAST Time:2012-09-24 09:01:08
