Agricultural chemical company Nufarm Limited (ASX: NUF) released interim results today, reporting net profit after tax down 40% to $12 million and underlying EBIT down 12% to $75 million.
The upgrade of the Laverton manufacturing plant was a one-off item that strained the budget in the first half, together with adverse market conditions in Latin America and Europe.
However, these results should not cause alarm. Nufarm's sales follow a seasonal trend and are typically concentrated in the second half of the year. The company forecasts full year EBIT growth of between 5% and 10% in FY2018.
Seed treatment, Nufarm's secondary business, is growing and turned last year's loss into a positive contribution to earnings. Recent acquisitions – including a US$490 million deal for a portfolio of over 50 crop protection formulations registered for use in the European Union – are expected to strengthen the company's position in Europe, lifting EBIT by around $60 million from FY2019.
Investors are betting on the favourable outlook, pushing Nufarm's share price 5% up to $8.67.
The interim dividend will remain unchanged from last year, at 5 cents per share unfranked.
