Penrice wins anti-dumping case against Chinese imports of sodium bicarbonate

An anti dumping case initiated by Penrice Soda Holdings Limited against Chinese imports of sodium bicarbonate has been successful in having provisional measures imposed, further enhancing the South Australian company’s continuing market leadership.

Addressing Penrice’s first annual general meeting since the Company joined the ASX lists in July, Chairman Mr John Heard told shareholders today that management had been notified by the Federal Government of the anti-dumping case victory.

“We have been informed that the Federal Government will impose duty on imported sodium bicarbonate from China, adding further weight to Penrice’s retention of market leadership in sodium bicarbonate markets,” Mr Heard said.

Mr Heard told shareholders that the outlook remained very positive for Penrice’s three main products, sodium bicarbonate, soda ash and limestone.

As well as benefiting from the dumping case success, he said Penrice’s sodium bicarbonate sales would be boosted by expanded plant capacity in South Australia which was expected to be brought on line in 2006.

“Your Company also believes there is great potential to expand sales of sodium bicarbonate in Japan and South East Asia,” Mr Heard said.

Penrice is the only manufacturer of soda ash in Australia and is the leading supplier of soda ash and sodium bicarbonate to the local market.

Mr Heard said the outlook for soda ash was strong with global prices rising due to a worldwide shortage of soda ash, and raw material price increased internationally.

“Soda ash volumes are also forecast to rise, predominantly to the glass industry with the continued increase of wine bottle sales – particularly in the export market,” he said.

Another solid performance was also expected in limestone product.

Looking to 2005-2006 earnings, Mr Heard said that, as previously reported, the current financial year started disappointingly for Penrice with the incident at the Osborne manufacturing plant in July.

“During a planned shutdown in July for major maintenance, an unprecedented failure of a pressure vessel occurred resulting in the loss of approximately eight days of production to facilitate repairs to the vessel and a safety check of other plant equipment. Fortunately, no injuries occurred during this incident,” he said.

“As we reported to the market in August, this incident had a negative impact of $0.75m on Penrice’s July NPAT, a combination of lost production, increased production costs and the cost of plant remediation.

“On a brighter note, I am pleased to report that the plant was back in full production in August with output tonnes and cost of production better than budget in both August and September.”

Mr Heard said it was anticipated that the unforeseen plant incident would result in Penrice’s NPAT being below budget in the six months to 31 December 2005.

“Every effort is being made by management to recover the shortfall over 2005-2006 but at the same time results are being impacted by higher operating costs, in particular fuel, freight and a continued high exchange rate,” he said.

The Board of Penrice is forecasting the payment of an interim dividend in April 2006 and a final dividend in October 2006 totalling 14.7 cents per share, fully franked, which was the indicative dividend outlined in the prospectus.