Nufarm soars on Agripec consolidation

The consolidation of Nufarm's Brazilian business, Agripec, contributed to a 70.6% rise in the Australian company's sales to Aus$989.9 million (US$861 million) in the six months to January 31st 2008. On a pro forma basis, sales rose by 31.4%, according to preliminary figures issued this month. Agripec was accounted for on an equity basis during the first half of fiscal 2007, but sales were consolidated after Nufarm acquired the outstanding 50.1% stake in the business on June 1st.

First-half earnings before interest and tax (EBIT) rose more than three-fold to Aus$83.3 million. On a pro forma basis, EBIT was up by 71.4%. Operating net profit after tax increased more than five-fold to Aus$35.4 million, or by 73.5% pro forma. These figures exclude the impact of non-operating items, such as the Aus$22.6 million loss associated with barter trading in Brazil. Reported net profit after tax fell by 59.6% to Aus$4.6 million.

Nufarm's Brazilian business generated record first-half sales of R$346 million (US$191 million), up by 20.1% on the same period a year earlier. The company's sales in South America rose more than six-fold to Aus$250.8 million, or by 18.1% on a pro forma basis. Farmers in the region benefited from a good soybean crop and "excellent" prices, Nufarm points out.

Strong early sales of glyphosate and phenoxy herbicides contributed to a 54.3% rise in Nufarm's Australasian sales to Aus$365.5 million. After slow sales during the drought-affected August to November period, the company saw "very strong" sales in December and January following improved conditions in New South Wales and Queensland.

The North American business also had a stronger first half due to early buying patterns and good demand for glyphosate. Sales in the region were up by 34.7% to Aus$189.9 million. Continued progress in eastern Europe and an improved performance in the UK, France and other markets resulted in a 12.6% rise in European sales to Aus$183.6 million.

          Nufarm's first-half sales by region1 

Six months ended Jan 31st        2007    % change    2008 

Australasia                              236.9     +54.3     365.5 

South America                          39.2     > 100     250.8 

North America                        141.0     +34.7     189.9 

Europe                                   163.0     +12.6     183.6 

Total2                                    580.2     +70.6     989.8 

1 preliminary figures; 2 may not add up due to rounding. 

Nufarm is "very confident" of reaching its full-year net profit target of Aus$145 million. The acquisition of A H Marks and the planned purchase of Etigra are expected to contribute additional earnings of Aus$5 million, resulting in adjusted earnings guidance of Aus$150 million.