In morning trade the Nufarm Limited (ASX: NUF) share price has jumped 4% to a five-year high of $9.75 after the agricultural chemical company announced its half-year results.
Highlights include:
- Revenue increased 15% on the prior corresponding period to $1,360 million.
- Underlying earnings before interest and tax rose 19% to $85 million.
- Underlying net profit after tax increased a massive 67% to $19.8 million.
- Net debt decreased 8% to $856 million.
- Earnings per share of 5.3 cents.
- Half-year dividend of 5 cents per share.
I feel this is a solid result from Nufarm. Clearly the hard work the company has put in to transform the business over the last 18 months has paid off.
Despite global market conditions being highly competitive, Nufarm delivered revenue growth across almost all of its regional crop protection businesses.
Only Europe and the company's seed technologies business underperformed during the half.
What's next?
According to CEO Greg Hunt the company is on track to deliver improved earnings growth for the full-year.
He stated that although the global crop protection market is expected to remain competitive, thanks to cost savings, performance improvements, new product launches, and improved customer relations, he is confident that Nufarm will continue to generate profitable growth.
Should you invest?
I've been very impressed with Nufarm's turnaround and believe management should be commended for it. At present the company would definitely be my pick in the materials sector ahead of companies such as Orica Ltd (ASX: ORI) or Incitec Pivot Ltd (ASX: IPL).
But at approximately 17x trailing earnings I feel its shares are close to fully valued now. For this reason I wouldn't start an investment today, but would be interested in getting in at a lower price, should the opportunity to arise in the future.
