Nufarm Sees Sharp Rise In Profit
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Crop protection group Nufarm sees more earnings growth in the coming year for the company after posting a 316% jump in net profit to $114.5 million for 2016-17.
Nufarm’s full-year profit for the 12 months to July 31 compared to last year’s $27.5 million profit which was heavily impacted by restructuring costs and ignoring those one off costs underlying net profit was up 25% to $135.8 million Final dividend up one cent to eight cents. That made a full year payment of 13 cents a share, up from 11 cents in 2015-16.
While the profit result was slightly less than market forecasts for $118 million but the 12% revenue jump to $3.1 billion was just above forecasts for $3 billion.
Excluding one of items, including the impact of $23 million in one-off restructuring and asset rationalisation costs, underlying net profit jumped 25% to $135.8 million.
Nufarm CEO, Greg Hunt, said the company’s ability to grow revenues and maintain margins in a period where the overall industry saw a contraction in sales was an excellent outcome.
“We secured market share gains in most of our major markets, supported by new product introductions, and a much closer focus on our customers,” he said in yesterday’s statement.
“It was a challenging year for the industry, with extremely competitive conditions driven by lower crop prices and lower demand for crop protection chemistry.”
Nufarm posted strong revenue gains in Australia, North America and Asia. While South American sales were ahead of the prior year, market conditions in Argentina led to a significant fall in the profitability of that business. European sales were slightly down, but margins improved leading to a stronger profit outcome.
Mr Hunt said the company is on track to meet its 2018 target of achieving at least $116 million in net benefits from efficiency programs which have been implemented across the business in recent years.
The company says it has delivered cumulative benefits of $101 million to the end of financial year 2017 (with $26 million of cost cuts booked in the 2016-17 year).
And while the company is looking to grow this coming year (as you’d expect), Nufarm continues to watch the fallout from a series of mega mergers in its sector in the past year.
According to Mr Hunt Nufarm “is continuing to assess opportunities that might arise from broader industry consolidation moves".
Earlier this month, Nufarm told investors it was continuing to assess potential opportunities in response to speculation it could pounce on assets held by China National Chemical Corporation and possibly US-based crop protection group Albaugh.
Nufarm has been examining how it can benefit from a suite of mega-mergers among global agrichemical giants. State-owned ChemChina sealed the nation's biggest foreign deal earlier this year with its buyout of Synengta for $US43 billion.
Other mergers include the $US130 billion union between Dow Chemical and DuPont and Bayer's $US66 billion play for Monsanto.
Investors have been speculating for most of this year that Nufarm would be involved in buying up assets shaken free in the consolidation.
But so far nothing has happened. The Dow-DuPont tie-up, with US-based FMC group reaching agreement for a $1.6 billion asset swap to grab DuPont’s crop protection assets. It was a deal viewed as too large for Nufarm to swallow by Australian analysts. Nufarm’s market value of $2.3 billion yesterday.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.