Crop protection (herbicides) group Nufarm (NUF) has lifted its unfranked interim dividend to 4c a share, from 3c after reporting a 23% jump in first half profit yesterday.
The company told the ASX that the $23.2 million net result was struck on a modest 4% rise in revenues to $1.18 billion from $1.14 billion.
Group underlying earnings before interest and tax rose 11.8% to $63.4 million.
Yesterday’s interim release was the first without company founder Doug Rathbone at the helm, who left the company earlier this year.
Nufarm said it is on track to realise $16 million in annual cost savings from 2017 as it continues overhauling its Australian and New Zealand manufacturing base to lower costs and make the company more sustainable in drought.
"Business conditions were challenging in some of the company’s major markets, particularly in Australia and in Brazil. Despite this, the company achieved earnings growth in all major crop protection regions,” the company said yesterday.
“A combination of later than normal sales and a lower margin sales mix resulted in the seed technologies segment generating revenues and an average gross margin below that of the corresponding period last year."
The company said it expects a stronger second half than the same period last year (second half earnings are always higher than in the first half) and said recent rains in Australia had bolstered sales of herbicides.
NUF 1Y – Nufarm lifts dividend, profits up, costs down
The weather in Australia over February and March had been more favourable than at the same time last year, although Western Australia still needed good rain to drive sales demand ahead of the crop planting period.
In Brazil, where sales in the second half of the year are generally smaller, low incidences of insects and disease would reduce crop protection requirements in the second half.
Nufarm said a more normal spring season in the US would help lift earnings in the North American business, while Europe is expected to have a slightly stronger second half than in the previous year given normal seasonal conditions.
Nufarm said that first half conditions had been challenging in Australia and Brazil, but all its major crop protection regions grew earnings.
Nufarm said net debt at January 31 was $890 million, down from $1.02 billion at the same time in the previous year. ”Net working capital at period end was also lower at $1.17 billion (31 January 2014: $1.33 billion) and the average net working capital to sales ratio at 31 January was 43.9% compared to 49.4% last year,” the company added.
Nufarm shares eased 2.5% to $6.77.
