Nufarm tops forecasts despite profit tumble, flags higher earnings ahead

Nufarm has beaten out market forecasts despite one-off restructuring costs leading to a sharp fall in full-year profit.

Nufarm chief executive Greg Hunt. (Supplied)

Agricultural chemical group Nufarm has comfortably topped market forecasts despite seeing its profits slide by more than a third.

For the year to July 31, the ASX-listed company (NUF) booked a net profit of $27.5 million, down 36.3 per cent on the prior year due to previously flagged restructuring costs of $81.4m.

The numbers far outstripped projections from analysts for a swing to a loss of $4.2m.

The group’s underlying earnings, which strip out the impact of one-off significant items, dipped 7 per cent to $108.9m, but still beat expectations for a reading of $100.5m thanks in part to a 2 per cent lift in revenues to $2.79 billion.

Nufarm managing director Greg Hunt noted “challenging market conditions” had weighed on the fiscal 2016 result, but tipped higher earnings across the coming year.

“The combination of additional cost savings benefits; margin expansion and revenue growth in a number of the company’s businesses is expected to result in earnings growth in 2017,” he said.

“This is despite an expectation that soft commodity prices will remain low and general market conditions will continue to be subdued.”

The group expects a strong performance locally as the cropping season is viewed positively given recent rains.

“The company’s performance in Australia is expected to strengthen, with restructuring initiatives resulting in a lower and more flexible cost base, and a better balance between sales of high margin and commodity products that should see sales and production volumes improve,” Mr Hunt said.

“The outlook for the Australian summer cropping season is positive, with good winter and spring rains across the country.”

Nufarm declared a final dividend of 7c a share, bringing total dividends for the year to 11c.