11 Jun 2014

Nuplex profit margins 'under pressure'

8:55 am on 11 June 2014

Nuplex says its sales volumes in Australia are beginning to stabilize but its profit margins remain under pressure and it expects that market to remain difficult beyond year end.

Nuplex shares fell more than 7 percent on Tuesday to $3.10 after the company yet again downgraded its earnings guidance for the year ending this month and largely blamed the difficult Australian market.

The shares later recovered to close at $3.22, down 14 cents.

It's the second time this financial year the resins manufacturer has lowered its guidance after doing so twice last year.

Nuplex now says its operating profit for the latest 12 months will be between $121 million and $125 million, including the $2.4 million costs of a reorganisation of the Australian and New Zealand operations announced in February.

Previously, the company had expected an operating profit between $130 million and $145 million.

Adverse currency movements and accounting adjustments also contributed to the lower guidance.

Chief executive Emery Severin said he was not expecting an improvement in Australia in a hurry.

He said the volumes, particularly in Australia, were starting to stabilise to some extent and it was now a price margin and competition issues that the company had to deal with.