ian davis nuplex industries limited - asx · 2009. 11. 3. · nuplex is an industrial resins &...
TRANSCRIPT
Ian Davis
Nuplex Industries Limited
Nuplex
–
an industrial resins & specialties business
37
ASX Small to Mid Caps Conference Hong Kong, 29 October 2009
John Hirst
–
Managing Director
Nuplex is an industrial resins & specialties company75% of sales from manufactured products25% of sales from distribution of 3rd party products
Operates in two business groups, Resins and SpecialtiesOne of the world’s top 10 Resin manufacturersOne of Australasia’s top 4 Specialties distributors
Manufactures in 10 countries and sells to more than 80 countries
1,650 employees
Sales of around A$1.3 billionUS$1.1 billionNZ$1.5 billion
Target EBITDA to Sales Ratio is 9%Range over the cycle of 7 – 10%
Net debt to debt + equity is less than 20%
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Who we are
Stock exchange listings ticker code: NPXQuoted on ASX since 1999Quoted on NZX since 1956
Market capitalisationAUD $380 millionNZ$460 million
53 years as a profitable listed company
190 million shares on issue
Approaching 11,000 shareholders
Share ownershipInstitutional 37%New Zealand total 87%
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From the investor viewpoint
Performance development1998 ‐
2009
Sales
Dividend
Specialties
Resins
• Nuplex resins and specialties –
essential ingredients for things we all use
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Coating ResinsInputs for production of industrial and decorative paints
Composite ResinsInputs for manufacture of glass-reinforced composite products
Paper ResinsFunctional resins and process control inputs for paper manufacture
Agency & DistributionSpecialty products for chemicals, plastics and life sciences industries
MasterbatchColour and process additives for plastic moulding and fabrication
Construction ProductsFunctional flooring, cladding and waterproofing for construction
What we do
Operations Australasia Asia Europe Americas
Resins
Specialties
Water‐based, solvent based and powder
resins for the coating market; composite
resins and paper resins
Agency and distribution including specialty
products for the chemicals, plastics and life
sciences industries; Masterbatch; and
construction products
Water‐based, solvent based and
powder resins for the coating
market; composite resins
Masterbatch
Water‐based, solvent
based and powder resins
for the coating market
Water‐based, solvent
based and powder resins
for the coating market
Nuplex’s global operations
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Nuplex’s manufacturing locations
• Commonality between segmentsRaw materials
Plant & equipment
Process & technology
Compliance
• DifferencesEnd markets
Application technology
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Resins business
Resins for coatings
• A global business with varying regional characteristics• Australasia
Decorative 70%
Specialty 30%• Asia
Decorative 50%
Specialty 50%• Europe & Americas
Decorative 20%
Specialty 80%
• Principal end markets• Automotive
Marine• Furniture
Electronics• Protective coating
Industrial• Decorative
Construction
• Principal products• Water based, solvent based, powder resins
• Coating industry growth rate• Global 4%
• Market dynamics• Manufacturing is shifting to Asia• Increasing demand for specialty coatings and high quality• Market demanding low environmental impact products
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≈80% of Resins business
Resins for composites
• A regional business with varying sophistication• Australia
Specialty 65%
General 35%• New Zealand
Specialty 70%
General 30%• South East Asia
Specialty 85%
General 15%
• Principal end markets• Marine & leisure
Swimming pools
Tanks• Transportation
Infrastructure
Mining
• Principal products• Polyester, epoxy & vinyl ester resins, gelcoats & flowcoats• Reinforcements, catalysts, auxiliaries, engineering services
• Composites industry growth rate• Global 5 ‐
6%• The most volatile resin segment
– Highly reflective of economic conditions
• Market dynamics• New applications continually being found for growth• Asia moving towards higher quality requirements
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≈15% of Resins business
Resins for paper
• A regional business• Australia• New Zealand
• Principal end markets• Tissue
Fine paper• Newsprint
Packaging board
• Principal products• Functional resins for
sizingcoatingwet strength
• Process aids for paper making
• Industry sector growth rate• GDP
• Market dynamics• Stable business sector• Firm currency creates export difficulties
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≈5% of Resins business
• Commonality with Resins businessMarkets with resins
Vertical supply
Available laboratories
Industrial selling skills
Compliance management
• Commonality within SpecialtiesMasterbatch & plastics sales
• DifferencesMinimal manufacture
Some unique markets
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Specialties business
Specialty products
• A regional business• Specialty Products are Nuplex’s growth focus in Australasia
• Principal end markets• Manufacturing industry• Food & pharma processing• Mining
• Principal products• Chemicals• Plastics• Life Science products
• Growth rates• Low in Chemicals & Plastics• Moderate in Life Sciences
• Market dynamics• Consolidation of global supply
– Creates risk & opportunity
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≈75% of Specialties business
Masterbatch
• A regional business• New investment and growing in Asia
• Principal end markets• Packaging plastics• General plastic articles• Textile fibres
• Principal products• Colour concentrates in plastic• Colour concentrates in aqueous media• Additive packages in plastic
• Growth rates• Low in mature markets• 10+% in growing markets
• Market dynamics• Smaller batch sizes• Quicker service
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≈15% of Specialties business
Construction products
• The heritage Nuplex business – NZ dominated• Differentiated through relationship with linked Contractors
• Principal end markets• Flooring systems
industrialcommercial
• Commercial waterproofing• Industrial & commercial hygienic surface finishing • Residential cladding
• Principal products• Resin & resilient flooring, adhesives, tools
• Lightweight plasters & polystyrene cladding
• Sheet & liquid membranes
• Growth rates• GDP
• Market dynamics• Agriculture, horticulture & residential markets important
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≈10% of Specialties business
Our markets
• Australasia• Soft in NZ with no signs yet of recovery – down 15% over 2008• Australia has recovered from its low point• Still down 15% but gaining real ground particularly in composites
• Americas• No signs of recovery with continuing weakness• Shifted emphasis to higher margin specialties
• Europe• Uplift from late in May with good demand post summer holidays• Still down 20% from 2008 –
but this is a good recovery
• Asia• China showing continuing growth
– Moved market focus to high end products as capacity becoming constrained• Vietnam returned to strong demand• Good signs throughout rest of SE Asia that demand is returning
– High end, high margin market remains strong
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Indicative 2010 v 2009
Our margins and costs
• Raw material costs• Costs have come off 4 year highs to provide margin uplift across
all regions• Upwards pressure now which will be largely recovered through pricing
• Discretionary spending• Complete ban has reduced operating costs significantly
• Restructuring• All operations have matched production to market requirements• Fixed cost reduced by $5 – 7 million annually
– Australasia– USA
• Further $5 – 7 million annual reduction targeted for the current year 51
Raw material cost indexUS$ through Sept 09
2009 highlights
o Sales $1.5 billion with demand generally stabilised
o Remained profitable while demand fell by 20‐30% ‐
$16.7 million
o Asian earnings up 120%o China and Vietnam especially strong
o Operating cash flow up 61% to $123 million – a record
o Total dividends of 8.5 cents per shareo 68% of net operating profit
o Gearing 20% at 30 June 2009o Headroom in borrowings around $200 million
o New capacity for composite resins commissioned in Australia and Indonesiao Improved efficiency and ability to produce broader product range
o Raw material costs eased on low demando Generally beneficial to margins
*All figures NZ$ (NZ$1 = US$0.75 at 22 October) 5
2
Seek preferred supplier position in key markets throughSuperior technical serviceExceptional operational efficiency and serviceSensitivity to customer profit and sustainability
ResinsGrow global coatings business
o Greenfield investment in specialty segments and growth economieso Consolidation of mature markets in both specialty and general product segments
Grow composites business by transitioning into adjoining marketso South‐east Asia is primary focus
Invest in sustainable technologieso Environmentally‐friendly low and zero emission products and processeso Raw materials from renewable resourceso Low cost options with near comparable performance
SpecialtiesBroaden product range – ‘one‐stop shop’
o Focus on higher growth and sustainable segments
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Strategy
Outlook
o Trading conditions generally stable to improvingo General optimism that there is no downside from hereo Supply chain now in line with underlying demand
o Recovery slow but will gain momentum in the mid term
o Business will be right sized
o Investment to continueo Innovative and sustainable technologyo Capacity in high growth regions
o Relatively low demand for capitalo Approximately $70m million capex over 3 yearso Major Items are
Suzhou expansionNew ERP systemVietnam expansionWacol warehouse
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Nuplex – a growth company
Forecast
Regional Influence on EBITDA growth
New Zealand
Australia
Global
Asia
THANK YOU
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Additional Material
• Regional EBITDA history – 8 x half year periods
• Board of directors
• Executive managers
• 5 year history of key financials
• Analysts forecast and consensus
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Regional EBITDA history
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EBITDA – NZ$ EBITDA – NZ$
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Directors
Rob AitkenIndependent chairmanLocation: Sydney, AustraliaSkills: Chemical engineering,
International business
David JacksonIndependent directorLocation: Auckland, New ZealandSkills: Accounting, audit
Bryan KensingtonIndependent directorLocation: Auckland, New ZealandSkills: Accounting, insolvency
Michael WynterIndependent directorLocation: Sydney, AustraliaSkills: Legal, Asian business
John HirstManaging directorLocation: Sydney, AustraliaSkills: Chemist, Coatings and
Resins broad experience
Barbara GibsonIndependent directorLocation: Melbourne, AustraliaSkills: Chemist, Chemical Industry
General Management
Peter SpringfordIndependent directorLocation: Auckland, New ZealandSkills: Industrial company senior
management, Asian business
John Hirst – Group managing director
Management structure
Executive Management
General Management
General counsel &
company secretary
James Williams
Regional operations
managers–
Australasia– Asia– Americas– Europe
Chief Financial Officer
Ian Davis
Group General
Manager Operations
Tony Cooke
Group General
Manager Specialty
ProductsCharles Northcote
Group General
Manager Functional
MaterialsSam Bastounas
Group General
Manager Nuplex
ResinsRob Harmsen
Group financial
controller
Group general
manager –
Communications and
Business Systems
General managers– PML Group– APS (Australia)– APS NZ
General managers– Composites–
Construction–
Masterbatch– Paper
General managers– Americas– Asia–
Australasia– Europe Middle East & Africa
Group purchasingManager
Group generalmanager –
Technology
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Nuplex 5 year history
2009 2008 2007 2006 2005
Sales 1,494m 1,532m 1452m 1301m 929m
EBITDA 92m 122m 104m 103m 82m
Operating profit 24m 53m 38m 35m 32m
Dividend per share $0.193* $0.43 $0.36 $0.335 $0.265
Net tangible assets 355m 205m 166m 195m 160m
Debt % funds employed 17% 46% 50% 46% 50%
61All amounts are in NZ$
* Adjusted for share rights, placement and consolidation for guidance only
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Broker Date Recommendation Forward share priceABN Amro Craigs 27/08/09 Buy NZ$2.76
First NZ Capital 28/08/09 Outperform NZ$3.09
Forsyth Barr 27/08/09 Hold NZ$2.54
GSJBW (NZ) 27/09/09 Buy NZ$2.95
Macquarie (NZ) 28/08/09 Outperform NZ$2.70
UBS 27/08/09 Neutral NZ$2.30
Actual FY09 FY10 FY11 FY12Forecast: Revenue (NZ$) 1.49 billion 1.46 - 1.60 billion 1.53 - 1.67 billion 1.57 - 1.72 billion
Forecast: EBITDA (NZ$) 92 million 95 - 106 million 101 - 120 million 109 – 131 million
Consensus EBITDA 91.5 million 100.4 million 110.3 million 119.3 million
Analysts’
forecasts