Melbourne-based agricultural chemicals and seeds supplier Nufarm (NUF) says its 2012-13 performance was hit by challenging seasonal conditions and a difficult market in Australia.
As a result, sales edged higher by 4%, but net earnings dropped 28%.
But the company told the ASX yesterday in its profit report that it expects to lift underlying earnings in 2013-14 as normal seasonal conditions return to much of its biggest market, Australia.
Nufarm said 2013’s annual profit of $83.2 million (excluding one-off items) had been impacted by lower demand for crop protection chemicals due to exceptionally dry weather across much of Australia, which is the company’s largest market. Group revenues increased by just over 4% to $2.28 billion (2012: $2.18 billion).
But Nufarm managing director Doug Rathbone said a strong recovery in demand for agricultural chemicals is expected in Australia as wetter, normal seasonal conditions return.
‘‘We’ve had an extremely good August for the total company, driven largely by Australia but also Brazil,’’ Rathbone said in yesterday’s statement.
The proforma net profit of $81 million was up 11.6% from 2011-12’s $72.6 million, but the absence of one-off items saw the bottom line come in at $83.2 million, down 28% from the previous year’s $115.4 million.
Nufarm said in yesterday’s statement this "underlying result reflects very challenging seasonal conditions and a poor result in Nufarm’s largest country market, Australia, partially offset by earnings growth in all other geographic regions, as well as the seed technologies business".
The dry conditions saw sales in the Australian and New Zealand crop protection business down 14% to $604.4 million.
Persistent dry weather in most Australian cropping regions affected demand for products to control summer weeds, insects and fungal diseases.
The dry weather also resulted in low demand for herbicides during the pre-plant period ahead of the major winter crop.
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Nufarm’s seed technologies business, which includes the global Nuseed business and Nufarm’s seed treatment applications, lifted sales 9% to $131.7 million.
Looking to 2014, Nufarm said that with average seasonal conditions in its major markets, the company expects to generate improved underlying earnings before interest and tax in fiscal 2014.
"Despite increased competition, the company is forecasting a strong improvement in its Australian results, given a return to more normal seasonal conditions and demand patterns," Nufarm said.
But the company warned that excess inventory resulting from last year’s poor season may place pressure on margins in some segments.
Despite the weaker result, Nufarm will pay a fully franked final dividend of 5c per share, making a full year dividend of 8c, up from the 6c a share paid in 2011-12.
Nufarm shares eased 2c to $4.65 in yesterday’s generally solid market.
