Nufarm shares slide despite a 61 per cent half-year profit surge

The boss of Nufarm says the company is on track to generate $4bn in annual revenue by 2026 after reporting a 61 per cent half-year profit surge.

Nufarm CEO Greg Hunt says its “transformation and continued focus have allowed us to navigate the uncertainty and volatility”. Picture Yuri Kouzmin

Shares in crop protection company Nufarm have slumped 8.6 per cent, despite the company progressing the turnaround of its business with a 61 per cent surge in half-year profit.

Net profit jumped to $99m in the six months ending March 31, compared with $61.3m in the same period last year, with chief executive Greg Hunt citing “favourable” conditions.

The result prompted the company to pay its first interim dividend in four years — with an unfranked half-year payout of 4c a share on June 17.

“While we have benefited from healthy seasonal demand in our markets and higher grain prices, we are also reaping the outcomes of the hard work undertaken in recent years to transform the company,” Mr Hunt said.

“Our focus on core crops and key geographies is delivering strong results. Our seed technologies platforms continue to hit strategic milestones and provide significant growth opportunities for the company.

“Our transformation and continued focus have allowed us to navigate the uncertainty and volatility of the current global climate to deliver pleasing earnings growth for shareholders.”

Revenue, meanwhile soared 31 per cent to $2.17bn.

Nufarm did not provide formal earnings guidance, but Mr Hunt said the company was on a “credible path” to generate annual revenue of $4bn by 2026.

“Full year results are anticipated to be proportionately more weighted to the first half compared to FY21, given the elevated forward sales due to global uncertainty and volatility in relation to active ingredient pricing, global supply chain and logistics challenges.

“The outlook for the full year remains positive. Current industry conditions are highly favourable with grain prices likely to remain elevated driving increased planting and demand for crop protection products.”

Mr Hunt also shrugged of Covid-fuelled supply chain crunches and inflation pressures returning.

“Despite some concerns around global supply chains and inflation, the growth outlook and prospects for our industry remain clear. The fundamental need to grow more food to meet the needs of growing populations is ever present.”

UBS analyst Evan Karatzas said it was “another strong result that highlights Nufarm‘s impressive earnings turnaround over the past 18 months”.

But the company’s shares closed 8.6 per cent lower at $6.07. This compares with 1.7 per cent drop across the broader sharemarket.