Well, struggling agri-chemicals company, Nufarm made its last of five profit guidances, for what it was worth.
The 2010 financial results were delivered just after 2 pm yesterday while the shares were again sinking, this time under $4.
They ended down nearly 4% at $3.94, after hitting a day’s low of $3.75.
As expected the news wasn’t good, an "operating profit of $58.6 million" before one off items, a loss of $22.6 million after one off items (losses) of $82.6 million.
The operating profit was at the low end of the company’s warning in July that its net operating profit would drop to between $55 million and $65 million and below analysts’ forecasts around $62 million.
Operating earnings before interest and tax (EBIT) – prior to the impact of material items – was $135 million.
This was more than half the $278 million in the previous financial year.
The lower result was struck on a 19% fall in revenues to $2.17 billion.
"This result reflects difficult trading conditions in the global glyphosate segment; an extremely competitive pricing environment; and the negative impact of climatic conditions in various regional markets around the world.
And the auditors were not confident. KPMG highlighted Nufarm’s recent covenant breaches and pointed to a "material uncertainty regarding group debt re-financing".
"The ability of the group to meet the conditions and obligations as set out in the agreements, and to secure a longer-term revised debt financing arrangement by 15 December . . . cannot presently be determined with certainty," they wrote in a report attached to the accounts.
Nufarm is 20% owned Japan’s Sumitomo Chemical which paid $14 a share for its stake.
It was hit by a slump in sales of its key weedkiller, glyphosate, as a late, cold winter hit crop planting in Europe and North America and the world’s biggest producer, Monsanto, slashed prices.
As well, farmers have realised that they don’t have to pay high prices for this chemical, or need as much since the slashed its use in the global downturn and slump in bank credit for farmers in many countries, especially Brazil and in Europe.
Nufarm says it expects the price war to continue to hurt its glyphosate profits, but said trading conditions should improve for other products.
But it is planning to introduce new products, focus on higher margin products and expand into new regions.
"These factors and initiatives provide strong confidence that the group will generate an improved profit outcome for the 2011 financial year," Nufarm said.
Sales in North America, which makes up about a quarter of its business, slumped almost 29%, while sales in Europe fell 25%.
As flagged on Monday, the company paid no dividend for the year. It paid 15c a share in 2009.
Net debt blew out to $620 million as of July 31, which put it in breach of two of its debt covenants.
Its bankers this week agreed on Monday to waive those covenants on loans due this year, giving Nufarm time to review its strategy and refinance its debt.
While lenders gave the company a reprieve on its covenants, the company was forced to pay around $10 million in higher interest costs and fees.
The company said in yesterday’s statement that of the $82.6 million after tax loss associated with material items, $30.1 million was associated with glyphosate related losses and costs relating to pricing support, the majority of which pertained to higher cost inventory held at the end of the 2009 financial year ($29.4 million of this total was recorded at the half year).
"These costs were mainly associated with inventory write downs; losses on sales; and various measures of one-off support provided to distribution customers during the first six months of the financial year.
"The company has resolved that any tax loss that cannot be recouped within eight years will no longer be recognised in the financial accounts, irrespective of the period in which the losses can be offset against taxable income in the tax returns of the individual jurisdiction.
"Consistent with this policy, a loss of $37.5 million was recorded for the non cash write off of previously recognised tax losses in Brazil.
"After tax costs of $10.7 million were associated with operational restructuring activities in the France, and in the UK where the company closed a manufacturing site at Belvedere.
"The majority of other material items were due diligence costs relating to the Sinochem takeover proposal, the Sumitomo Tender Offer and several seeds business acquisitions."
Nufarm said it is confident it will finalise new, longer-term loan arrangements by mid-December and CEO, Doug Rathbone said that despite its woes, Nufarm is not looking to sell assets as part of its strategy review
The review will continue for several months, with an update planned to be given to shareholders at the Annual General Meeting on December 2.
And finally, the company’s debt position is still terrible.
At July 31 the bank had unsecured bank debt of $765 million, of which $701 million was owing to the group’s main bilateral bankers, which are parties to a negative pledge deed.
To that must be added the temporary secured loan of $176 million, which means the company’s debt is now about $950 million, all of which is in need of refinancing.
Nearly $1 billion of d
