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Nufarm on track for earnings growth

AAP logoAAP 20/09/2016

Seeds and pesticide supplier Nufarm expects to lift earnings in the year ahead despite challenging conditions in agricultural markets and soft commodity prices.

The company made a net profit of $27.5 million in the year to July 31, a drop of 36 per cent from the previous year due to $81 million in restructuring costs.

Underlying earnings rose 21 per cent to $286.7 million, comfortably beating market forecasts, as Nufarm continued to achieve costs savings.

Chief executive Greg Hunt said the company was on track to deliver a promised $116 million in benefits by the end of the 2017/18 financial year.

Investors responded positively, with Nufarm shares adding 38 cents, or 4.6 per cent, to $8.71, their highest level in almost a year.

Crop prices have fallen and demand has weakened in some of the company's markets, but Nufarm expects earnings to grow in 2016/17 due to its cost savings and revenue growth in several businesses.

Mr Hunt is hopeful of a summer crop in Australia for the first time in couple of years, particularly after recent widespread rainfall.

"Where we sit today we would certainly believe that there would be enough subsoil moisture to get us a summer crop this year," he said.

The cropping season had come early in Brazil, bringing strong sales for Nufarm, Mr Hunt said.

New products and improved distribution is also expected to deliver benefits in the US.

COST SAVING PLANS DENT NUFARM'S PROFIT

* Net profit down 36pct to $27.5m

* Revenue up 2pct to $2.8b

* Final dividend up one cent to seven cents

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