Wellington, Aug 27 NZPA - Nuplex Industries reported a 65.4 percent fall in full year net profit to $16.7 million as tough economic conditions battered the company.

Revenue for the 12 months to the end of June fell 2.5 percent to $1.49 billion.

Managing director John Hirst said the 2008/09 financial year was without doubt the most testing in the long history of Nuplex, which makes and distributes resins, and other specialty products.

"After a strong start we suffered a number of major setbacks," he said today.

"First, rises in raw material costs in the early part of the year inhibited margins; then the collapse in European business in the second quarter culminated in a 30 percent reduction in demand over the prior year.

"The recession continued in the USA and New Zealand and business conditions there, which were already poor, deteriorated. In Australia, products exposed to discretionary spending were hit hard and, while Asia had a number of high spots, the lack of global demand for exports such as furniture took its toll."

During the financial year Nuplex also had to raise nearly $160m in new capital to meet debt commitments, following a fall in first half sales.

Mr Hirst said trading conditions now were best described as stable, with general optimism that the worst downstream impacts of the global financial crisis had passed.

A final dividend of 5c per share will be paid, along with a special dividend of 3.5c per share, which Nuplex said reflected directors' confidence in the company's future performance and strength of the balance sheet.

Ebitda (earnings before interest, tax, depreciation and amortisation) for the year was $91.5m, down 24.9 percent, with non-recurring items negatively affecting the result by $1.3 million.

Those items included restructuring costs, operational provisions and prior period adjustments, partially offset by a Netherlands government grant providing short term business support.

Bad debts of $4.7m were significantly ahead of historical levels, Nuplex said.

Operating cash flow for the year was $123.2m, of which $79m was generated in the second half from operational profits, tightly controlled cash management, and a reduction of $77.9m in working capital over the year.

Mr Hirst said the full benefit of significant downsizing in the United States and Australasia would come in the current financial year.

In the Resins business, sales revenue fell 3 percent to $1.16b, with ebitda down 25 percent to $74.1m.

Low demand across most sectors of the coating industry and large sectors of the composites market saw a substantial drop in tonnage, Nuplex said.

There was some relief in the second half from softer raw material costs as the supply side got out of balance, resulting in a return to more traditional margins.

In Specialties, sales revenue was flat at $329.1m, with ebitda dropping 24 percent to $17.4m.

Nuplex shares were up 14c to $2.30 around noon.