By Jenny Ruth
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Tuesday 24th May 2011 |
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Nuplex Industries's profit downgrade is disappointing and has led him to cut his forecasts for the year ending June, says Nachiket Moghe, an analyst at Aegis Equities Research, which is owned by Morningstar.
Nuplex now expects net profit for the year to be between $62 million and
$65 million. Its previous guidance had been between $68 million and $75 million. Moghe has cut his forecast from $67 million to $63 million.
Net profit in 2009/10 was $64.2 million, up from the $16.7 million it reported for the year ended June 2009.
"Nuplex suffered higher raw material costs and lower-than-expected demand in Australia for composites," Moghe says.
"This was blamed on sluggish consumer spending, bad weather conditions in Australia and higher imports on account of (the) rising Australian dollar." End markets such as swimming pool construction, infrastructure, boats and pipes were adversely affected.
"We think the prevailing weakness in Australasia rather than raw material prices would have played a bigger part in the firm's decision to downgrade earnings," Moghe says.
He hasn't changed his forecasts for the year ending June 2012. "We should see margins improve through full-year 2012 as Nuplex continues to implement price increases to cover rising petrochemical costs."
Recommendation: Hold.
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