Herbicide maker Nufarm returns to profit

Shares in Nufarm have hit a seven year high after the agricultural chemicals and seeds developer returned to profitability and forecast further growth.

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Nufarm made a net profit of $20 million in the six months to January 31, compared to a loss of $91 million a year earlier when the company booked restructuring costs of $103 million.

Underlying net profit rose 67 per cent to $19.8 million in the half year to January, up from $11.9 million a year earlier.

Nufarm shares gained 30 cents, or 3.2 per cent, to $9.67, their highest value since January 2010.

Revenue rose in all of the company’s regional crop protection businesses, except in Europe, as the company benefited from changes to improve its business over the last 18 months.

Chief executive Greg Hunt said Nufarm had also achieved growth in market share and margins despite weak global market conditions and strong competition.

Sales in Australia and New Zealand rose 32 per cent, but underlying earnings were lower due to discounting in order to regain lost market share.

Nufarm expects the global crop protection market to remain very competitive in 2017, with low soft commodity pricing prevailing due to strong crop harvests in most key cropping regions.

But with the benefit of cost savings, performance improvements and new product launches, the company expects to continue to generate profit and underlying earnings growth, Mr Hunt said.

Improved second half performances are expected in Australia, North America and Europe if rainfall is adequate.

But the Latin American business is expected to be impacted by negative market conditions in Argentina and the expected later timing of sales in Brazil.

RBC Capital Markets analyst Andrew Scott said Nufarm’s half year result was in line or slightly ahead of expectations on all key measurements.

NUFARM CULTIVATES A PROFIT

* Half year net profit of $20m v $91m loss

* Revenue up 15pct to $1.36b

* Interim dividend up one cent to five cents, unfranked.