Nufarm earnings to rise at least 15% on Sth America, currency gains

Agricultural chemicals manufacturer Nufarm says first-half earnings will rise at least 15% on improved trading in South America and Europe, and foreign exchange gains.

A strong performance in South America and an improved outcome in Europe "will more than offset what is likely to be a weaker first half result in Australia," managing director Doug Rathbone told shareholders at their annual meeting in Melbourne.

"We remain very confident of generating an improved underlying ebit outcome for the current full year," he says.

Nufarm shares last traded at $A5.67 on the ASX and have jumped about 40% this year.

In September, the company reported a return to annual profit, $A72.6 million in the 12 months ended July 31, after losses in 2011 and 2010.

Nufarm typically earns more in the second half of its year, reflecting the major cropping seasons in the Northern Hemisphere and Australia.

So far in the first half demand for crop protection products in Australia has been "relatively low" after a dry late winter and spring and as wheat farmers harvest their winter crop.

For summer cropping, mainly in Queensland and northern New South Wales, "further rainfall is needed to generate stronger demand for industry products".

"Consequently, Australia is tracking behind the 2012 performance in the first quarter of the current financial year," Mr Rathbone says.

Sales in Asia are tracking slightly ahead of the same period last year, with a more favourable monsoon season in Indonesia generating stronger demand in plantation crops.

The winter months in the US are relatively quiet, though Mr Rathbone noted that farmers "have a strong economic incentive to plant big crops next season". Market conditions in Canada "are generally good and we are seeing increased demand for a range of products".

Nufarm's Brazilian business is performing "very strongly" and Europe is tracking in line with expectations, he says.


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