afr

Quick Search | Advanced Search | Browse Archives Related News Alert Print Entire Page


Nylex lifts liquidity for big water play
Author: Eli Greenblat
Date: 25/10/2005
Words: 464
Source: AFR
Publication: The Financial Review
Section: Companies and Markets
Page: 16


A cashed-up Nylex has refined its business, shorn debt and is now tapping the water conservation market, writes Eli Greenblat.
Diversified manufacturer Nylex is within striking distance of being debt free and embarking on a new phase of growth and profitability.

It follows a near-death experience only three years ago when the conglomerate almost collapsed under the weight of more than $450 million in debt.

The company's resurrection has since come via the sale of 23 individual business units, raising $250 million. It is also focusing on products for residential water conservation.

Yesterday Nylex agreed to sell its plant hire operations to National Hire Group for $115 million, freeing up much-needed cash and simplifying its business model.

The sale of Australian Highway Plant Services will streamline Nylex's operations into two clearly defined divisions - consumer goods and industrial.

For the first time in years, Nylex is contemplating sizeable acquisitions as it expands its presence in the water conservation and garden equipment sector. It is also forecasting a profit.

It was a different story not so long ago. There were some nervous moments in 2002 when Nylex's bankers came within a phone call of shutting down the company following a disastrous and sporadic expansion into a range of unrelated and unprofitable operations.

The company was forced to write off many of its businesses, resulting in accumulated losses of more than $215 million.

Chief executive Glen Casey said yesterday the likely sale of a non-core automotive division later this year should net proceeds of $35 million and put an end to Nylex's debt worries.

Nylex has debts of about $150 million.

Mr Casey said the company would realise a profit of $50 million on the sale of Australian Highway Plant Services. He said the automotive and industrial division was profitable and acquisitions were planned to broaden its activities in this area as well as in water conservation.

"Acquisition targets in our core market segments have been identified and will now be pursued," he said.

"We've got a business model that is simpler and our goal now is to buy businesses that fit logically with that structure."

Over the next three to six months, Nylex will focus on the launch of a "grey water" diverter and a "whole of house" system.

It will also fund an advertising campaign to promote its portfolio of water conservation products such as storage tanks and bladders, sprays, irrigators and water-timers.

Nylex posted a net loss of $49.5 million last financial year, better than the $95.6 million loss in 2003-04.

But the company prefers to focus attention on the group's underlying profit before write-downs and abnormals, which showed a 55 per cent rise to $34.7 million.

It has also forecast its first profit in years for 2005-06.

Shares in Nylex slipped 1 ? yesterday, closing at 24 ?.