NPX
21/02/2013 08:30
HALFYR
REL: 0830 HRS Nuplex Industries Limited
HALFYR: NPX: FY13 HALF YEAR RESULTS RELEASE
NZX/ASX release 21 February 2013
FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012
Nuplex Industries CEO, Emery Severin said 'While difficult market conditions
continued throughout the period, reported earnings were steady, cash flows
were strong, and the interim dividend was maintained in line with the
previous interim dividend. This was a direct result of the benefits delivered
via our operational improvement program, our geographic diversity and the
earnings contribution from the two recent acquisitions.'
KEY POINTS:
o NPAT attributable to shareholders after significant items down 52% to
$11.5 million. Significant items after tax included
o $5.8 million write down of obsolete equipment as a result of the
restructure of the Australian and New Zealand operations
o $5.5 million write down of Nuplex's investment in Fibrelogic
o NPAT attributable to shareholders before significant items down 10% to
$24.5 million
o Earnings per share (EPS) was 5.8 cents per share, down 53%
o EBITDA of $57.6 million in line with prior comparable period EBITDA of
$57.3 million reflecting
o $11 million EBITDA contribution from acquisitions
o $2.8 million of costs relating to restructure of Australian and New Zealand
operations
o $3.2 million of upfront costs of the procurement initiative
o $2.1 million negative impact due to the higher New Zealand dollar
o Operating cash flow up 123% to $47.5 million
o Interim dividend of 10 cents per share in line with the previous interim
dividend
o Partially imputed with 1.4 cents attached for New Zealand shareholders
o 2013 financial year EBITDA guidance now expected to be between $135 and
$140 million
o Viverso on track to deliver EBITDA of EUR12 million
o Nuplex Masterbatch on track to deliver EBITDA of A$5 million
o NuLEAP on track to deliver at least $13 million in benefits
o Procurement initiative to deliver benefits of $5.3 million in the second
half
NZ$ millions
Change
1H 2013 1H 2012 Actual FX Constant FX
Sales revenue 828.7 746.4 11.0% 14.8%
EBITDA - reported 57.6 57.3 0.5% 4.2%
- before restructure & procurement costs 63.6 57.3 11.0% 14.8%
NPAT attributable to shareholders - reported 11.5 24.1 (52.3)% (50.3)%
- underlying
24.5 27.1 (9.6)% (7.1)%
Earnings per share (cents) - reported 5.8 12.3 (52.8)% (50.7)%
- underlying 12.4 13.8 (10.1)% (7.9)%
Dividend per share (cents) 10 10 - -
ROFE 9.8% 12.1% - -
Emery Severin said that again, it had been a challenging six months given the
extremely weak market conditions in Australia and, demand in Europe had been
more volatile than expected.
'EBITDA was stable over the period. The contribution from acquisitions, which
were in line with management expectations, were largely offset by costs
associated with the restructure of the Australian and New Zealand operations,
the upfont costs of the NuLEAP II procurement initiative and the negative
impact of the stronger New Zealand dollar. Whilst these restructuring and
procurement initiatives impact this financial result, I am confident they
will strengthen Nuplex's operations and start to deliver benefits as soon as
the second half of this financial year.
'Volumes from our existing operations were up slightly as growth in Asia and
the Americas offset the impact of lower volumes in Australia and New Zealand
and steady volumes in Europe - again this result highlights the benefit of
our geographic diversity.
'On a like for like currency basis, EBITDA excluding the contribution from
acquisitions was down by 14% when compared with the prior corresponding
period. This was predominantly due to the performance from the Australian
Coating Resins business, which was impacted by the very weak demand. Also, in
Europe, sales were lower than expected as a result of an earlier than usual
end of year slowdown. Pleasingly, this slowdown appears to have been confined
to November and December. Across the group, on average, raw material costs
were flat over the period.
'Additionally, EBITDA from existing operations was also impacted by an
increase in fixed costs associated with additional provisioning for a
European staff entitlement fund, additional research and development
investment and higher than normal legal costs.
'Positively, these impacts were largely offset by improved margins in all
regions due to NuLEAP sales and procurement initiatives, volume growth in
Asia and the Americas, and tightly controlled manufacturing costs.
'Reported net profit was impacted by non-cash, significant items relating to
the write down of plant and equipment as part of the Australia and New
Zealand operational restructure, as well as the $5.5 million write down of
Nuplex's investment in Fibrelogic,' said Mr Severin.
Financial Result Overview
Nuplex reported NPAT attributable to shareholders after significant items of
$11.5 million. This included $13.1 million of significant items which relate
mainly to the write downs associated with the restructure of the Australian
and New Zealand operations. This compares with NPAT of $24.1 million in the
prior corresponding period, which included significant items of $3 million.
NPAT attributable to shareholders before significant items was $24.5 million
for the six months ended 31 December 2012. Down 9.6% when compared with the
prior corresponding period result of $27.1 million, this includes the impact
of the after tax costs associated with the restructure of Australian and New
Zealand and the procurement initiative.
Nuplex reported EBITDA of $57.6 million for the period. This was broadly in
line with $57.3 million, reported in the previous half. Had the New Zealand
dollar remained unchanged over the period, EBITDA would have been $59.7
million, up 4%.
EBITDA for the period benefited from the $11 million EBITDA contribution from
the two acquisitions completed in the prior financial year, Viverso ($8
million) and Nuplex Masterbatch ($3 million).
This growth was offset by $2.8 million in costs associated with the
restructure of the Australian and New Zealand operations. Total restructure
costs, excluding asset write downs, are expected to be $9.6 million. The
operational restructure is expected to deliver cost savings of $0.5 million
in the second half of the 2013 financial year and $3.7 million of savings in
the 2014 financial year. Once completed, the restructure is expected to
deliver annualized cost savings of $5.6 million, which will be fully realised
from the 2015 financial year.
Additionally there were $3.2 million in upfront costs relating to the global
procurement initiative undertaken as part of Nuplex's operational improvement
program NuLEAP II. This initiative is expected to deliver $5.3 million in
cost savings in the second half of the 2013 financial year and $12 million in
the 2014 financial year.
EBITDA, including acquisitions and before the costs associated with the
restructure of the Australian and New Zealand operations and the global
procurement initiative was $63.6 million, up 11% (up 14.8% in constant
currency) compared with the prior period.
As at 31 December 2012, net debt of $209 million was largely unchanged from
$220 million as at 30 June 2012. Gearing was 27.4% and remains within the
Board's target gearing range of between 20 to 35%.
CEO Commentary
Commenting on the result, Mr Severin said, 'Our strategic initiatives to
strengthen Nuplex and improve returns continue to gain momentum. Our efforts
to embed safe behavior into every action, every day are gaining traction.
During the half there were no Lost Time Injuries to employees. There were two
Lost Time Injuries to contractors during the period.
'NuLEAP is on track to deliver the targeted $30 million in net benefits by
the end of the 2013 financial year. NuLEAP II planning is underway and we are
implementing the previously announced procurement initiative under which we
are building a globally co-ordinated procurement function and improving
supply chain efficiencies. We also continued to successfully implement our
global ERP system rollout.
'Strong cost control and cash management resulted in manufacturing costs
excluding acquisitions being held constant half on half and an improvement in
our working capital to sales ratio, which declined to 14.8% from 16.5% as at
30 June 2012.
'As previously announced, we are restructuring our Australian and New Zealand
operations to create a more efficient and responsive manufacturing network to
meet projected demand in the region. The restructure will reduce costs and
improve returns on funds employed. Through the closure of our sites in
Onehunga in New Zealand, Canning Vale and Wangaratta in Australia we will be
reducing our existing capacity. At the same time, we are investing to
increase customer responsiveness and production efficiency at our sites in
Penrose in New Zealand and Botany and Wacol in Australia.
'Pleasingly, the two strategic acquisitions completed in the 2012 financial
year have been smoothly integrated and are both delivering in line with
management's expectations. Viverso has been EPS accretive in its first 12
months of ownership and remains on track to deliver EBITDA of at least EUR12
million in the 2013 financial year. Nuplex Masterbatch's restructure is
complete and it is on track to deliver EBITDA of A$5 million in the current
financial year, and in line with our original business case.
'We continue to increase our presence in those geographies where the markets
for our products are developing and growing. In China, our site in Changshu
recently received its approvals. Still expected to cost US$35 million,
commissioning is now expected to occur at the end of the 2014 financial year,
six months later than previously expected. In Indonesia, we have committed to
invest US$5.4 million to expand capacity at our existing site in Surabaya.
Construction is expected to take 18 months and the new reactor will introduce
new technology capabilities which allow Nuplex Indonesia to enter into new,
high growth markets such as Automotive OEM and Vehicle Refinish in Indonesia.
'In Russia, discussions with our partner continue and the joint venture is
expected to commence trading operations in the fourth quarter of this
financial year,' said Mr Severin.
Dividend
Nuplex's interim dividend will be 10.0 cents per share, in line with the
interim dividend paid in 2012. It will be partially imputed for New Zealand
shareholders with 1.4 cents attached. There are no franking credits available
for Australian shareholders. The dividend will be paid on 2 April 2013, to
all shareholders on the register on 15 March 2013.
With no requirement to raise equity, the Dividend Reinvestment Plan will not
be active.
Outlook
Mr Severin concluded 'Keeping our focus on what we can control remains key to
navigating the ongoing challenging business environment.
'We are continuing to execute our strategy focused on improving returns on
funds employed by pursuing operational excellence and building market leading
positions. We continue to focus on margin management, tight cost control and
pursuing operational improvement to maximize earnings and cash generation
irrespective of the business cycle.'
Nuplex now expects 2013 financial year EBITDA to be within the range of $135
to $140 million.
Previously this range was $135 to $150 million. The narrowing of the guidance
range reflects the ongoing strength of the New Zealand dollar, the continued
impact of the soft trading conditions in Australia in the first half and the
earlier than usual end of year slowdown in Europe.
The 2013 EBITDA guidance assumes similar conditions in all of Nuplex's
markets for the remainder of the year. It is based on the average exchange
rates experienced over the first half of the 2013 financial year.
Additionally and as previously announced, the 2013 financial year EBITDA
guidance includes the benefit of a full year of earnings from Viverso of at
least EUR12 million and Nuplex Masterbatch of A$5 million and the delivery of
$13 million in incremental NuLEAP benefits. It will also benefit from $5.3
million in procurement benefits and accounts for $6.8 million in costs
associated with the restructure of Australia and New Zealand.
For further information, please contact:
Josie Ashton, Investor Relations +612 8036 0906 [email protected]
(ALSO ACCOMPANYING THIS RELEASE:
* NZX PRO-FORMA RESULTS ANNOUNCEMENT
* FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 DEC 12
* MANAGEMENT DISCUSSION & ANALYSIS
* RESULTS PRESENTATION)
End CA:00233199 For:NPX Type:HALFYR Time:2013-02-21 08:30:16
