Nufarm eyes growth offshore after loss

Agricultural chemicals company Nufarm will continue with what chief executive Greg Hunt calls its ‘self-help’ program.

New Nufarm chief executive Greg Hunt says Nufarm recorded a strong underlying interim result.

Agricultural chemicals company Nufarm will continue with what chief executive Greg Hunt calls its “self-help’’ program to position the group to pursue growth opportunities internationally and capitalise on softer commodity prices after posting a well-flagged half-year net loss.

Nufarm, which is part-owned by Japan’s Sumitomo Chemical, recorded a net loss of $91 million in the six months to January 31 compared to a profit of $23.1m a year earlier after booking $102.9m in one-off restructuring charges.

Nufarm said it would pay an unchanged interim dividend of 4c a share.

In late February the company warned it would take a $95m-$105m hit from restructuring its business and streamlining its product portfolio as part of its future growth strategy to focus on five crops in four key areas: North and Latin America, Australia and New Zealand and Europe.

Mr Hunt said after the one-offs, margin expansion, reduced net working capital and the benefits resulting from the company’s performance improvement program helped Nufarm record a strong underlying interim result.

“The focus for us will continue to be on the self-help program,’’ he said yesterday.

“We’ve also got pretty soft commodity prices at the moment after a couple of good years.

“Companies like us tend to do better in tough times when farmers’ terms of trade are depressed. Farmers will opt for a lower cost option when they think about their crop protection chemistry.’’

Shares in Nufarm fell in morning trade yesterday but recovered to close at $8.12.

Investors are still sitting on good gains so far this year as the shares have been on the rise since January and pushed over the $8 mark earlier this week.

“The self-help program is on track and commentary on Australia and Europe, which are the key second-half drivers, is relatively positive,’’ Citi told clients yesterday.

On Tuesday, a leading Chinese supplier to Nufarm, Zhang Hua, and his controlled entities Power Growth Global and Brecken International revealed they had increased their Nufarm stake to 5.158 per cent after holding an interest just below the 5 per cent disclosable threshold for the past two years.

Mr Hua, who is the chairman of Fuhua, a Chinese Agricultural Technology Investment Group, had previously visited Australia to see Nufarm’s operations and was in Melbourne in January to attend the Australian Open tennis tournament.

Fuhua, a big supplier of glyphosate to Nufarm, previously built factories for the Australian company in China and is well known to Nufarm chairman Don­ald McGauchie.

“The important thing is that we have had a relationship with them for a number of years,’’ Mr Hunt said, noting that Mr Hua had stated he was not interested in pursuing board seats or a takeover.

“I don’t know what their intentions are in terms of shareholding, but they are important to us.’’