Penrice warns of 1H net loss, full-year profit rise

Penrice Soda Holdings Ltd is expecting further profit growth in the current financial year with its key chemicals and quarry and mineral business groups all enjoying favourable market outlooks, chairm…

Penrice Soda Holdings Ltd is expecting further profit growth in the current financial year with its key chemicals and quarry and mineral business groups all enjoying favourable market outlooks, chairman Mr John Heard told the annual meeting in Adelaide on 28 October 2008. However, he warned that 1H 2008 results would be adversely affected by mark-to-market adjustments with a bottom-line loss expected. The board believed the 2H would see any 1H deficiency recovered, enabling the full-year result to be better than 2007/08. Penrice also announced details of an institutional placement to be followed by a share purchase plan offer to eligible retail shareholders. The placement, which would be co-managed by ABN AMRO Morgans and EL & C Baillieu Stockbroking, was targeting an AUD 8.5 million raising by issuing 6.8 million shares at AUD 1.25 each, equivalent to 15% of the company“s capital. An existing Penrice shareholder, London City Equities Ltd, had already committed to participating in the placement and was expected to emerge as a key investor with a shareholding of around 7% while underwriting up to AUD 2 million of the share purchase plan. “Funds from the institutional share placement and SPP announced today will enable Penrice to build on the operational improvements already achieved under the expansion and modernisation program implemented throughout the company“s operations over the past 18 months”, he said. Mr Heard said Penrice, which exports a large proportion of its sodium bicarbonate in US dollars, would therefore benefit from the lower exchange rate. “Our competitors, who import soda ash, conversely have to pay a much higher price for that product, which in turn strengthens Penrice“s domestic competitive position”. “A recent decrease in interest rates plus forecasts for that trend to continue will also benefit the company, although banks are being tougher in making credit available and charging higher margins for it”, he said. “Most importantly during this current final year, Penrice expects demand for its products – soda ash, sodium bicarbonate and quarry material – to remain strong”. “Your board confirms its previous guidance that it expects a further increase in Penrice“s net profit in 2008/09”, he said.