No interim dividend from struggling rural products group, Nufarm, but at least the company lived up to last week’s improved earnings guidance.
Last week it said that operating profit after tax and before material items would be "slightly above the previous $10 million to $20 million guidance provided by the company."
Nufarm yesterday revealed that excluding material items, underlying profit was $22.7 million, an improvement on the operating loss of $4.2 million one year earlier.
The shares eased 15c or 2.8% to $5.20.
"After allowing for material items, the interim headline result for 2011 is a net profit of $4.4 million. The headline result for the first six months of 2010 was a loss of $40 million.
"Excluding the impact of material items, operating earnings before interest and tax (EBIT) were $48.4 million, an increase of more than 154% on the $19.1 million EBIT result recorded in the first six months of the previous year," the company told the ASX.
And Nufarm Ltd said that its earnings prospects for the rest of its 2011 financial year depend upon factors outside its control, but it expects an improved result.
The company said it benefitted from positive climatic conditions in Australia, an improved operating environment, restructuring initiatives in Brazil, the absence of negative effects associated with high-cost glyphosate inventory, and diversifying its sales into higher-value products.
"Nufarm’s earnings prospects for the balance of the current financial year are dependent on a number of factors outside of the company’s control," Nufarm said on Monday.
"Seasonal and climatic conditions in key markets over the next few months will be an important determinant of product demand and various competitive pressures will help determine the pricing environment."
However, continued high prices for soft commodities was a positive driver for agricultural inputs.
"Given average to positive climatic and pricing conditions in the company’s major second half markets, directors are confident that the company will generate a full year operating profit that represents a strong improvement on last year’s result," Nufarm said.
"The 2011 interim results represent a significant improvement in the performance of the business compared to the first six months of the 2010 financial year," the company added…
Group sales were $900 million, slightly up on the $887 million in the previous corresponding period.
Excluding glyphosate sales, group revenues increased by 15% ($696 million v $604 million).
The company said that net working capital at January 31, 2011 was $1.01 billion, down $109 million from January 2010 levels.
"Lower inventories and receivables were the major contributor to the improved working capital outcome," directors explained.
Net debt at January 31, 2011 was $649 million, "significantly down on the $1.03 billion net debt position recorded at the end of the interim period in 2010. The company’s gearing ratio (net debt to equity) was 39% (69% at January 31, 2010)."
That surge in debt last year got the company into trouble with investors and its bankers.
There have been a number of senior management and board changes since then.
