Nufarm tips underlying annual profit to rise by up to 18%

BUSINESSDESK: Agricultural chemicals company Nufarm said it expects underlying annual net profit will be up between 12.1% and 18.2% on the previous year, although year-end debt will be higher than last year.

Nufarm reported bottom line annual losses in both 2011 and 2012.

The increased profit is despite variable market and climate conditions worldwide, while the higher debt reflects later selling seasons in several regional markets including Western Australia and continental Europe.

Nufarm said it expects underlying net profit for the year ending July 31 will be between $A110 million and $A116 million compared with $A98.1 million last year.

Underlying earnings before interest and tax (EBIT) will be between $A200 million and $A205 million compared with $A171.8 million last year.

Nufarm's underlying net profit was up 4.3% to $A23.9 million in the six months ended January 31, while the bottom line more than quadrupled to $A18 million from $A4.4 million.

For the year ended July 31, Nufarm reported a bottom-line loss of $A49.5 million compared with an $A22.7 million loss the previous year.

The company said Australian seasonal conditions have been positive in some cropping regions but that in Western Australia, in particular, the seasons were relatively dry and late, impacting demand for crop protection products.

“Nufarm's Australian business has performed solidly in a very competitive market,” it said.

North American cropping conditions began “very positively” but deteriorated significantly over June and July in the US. “Despite this, Nufarm has grown its business in most of its key market segments.”

The Brazilian business performed very strongly against a backdrop of positive market conditions and an average season, but European conditions were “very challenging”.

The company faced both unfavourable seasonal conditions and lower commodity prices in Europe but its European-based manufacturing operations, which make products for global markets, performed very strongly.

“Nufarm's seed technologies business is having an excellent year and will post strong revenue and EBIT growth on last year's results,” the company said.

Other contributors to the higher year-end debt are strong June and July sales in Brazil, which led to higher receivables and the costs of buying the Seeds 2000 business in the first half.

Nufarm expects to release its results on September 27.

Its shares fell 0.2% to $A5.30 on the ASX, down from their recent high at $A5.59 but well up from $A3.08 in August last year.

Nufarm's NZX listed perpetual, subordinated, unsecured, redeemable exchangeable notes are up $3 at $96 per $100 face value. While well above their low at $85 per $100 in the middle of last year, the notes have been trending lower since hitting $104.50 late last year.

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