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Nufarm forecasts profit growth
Jul. 22, 2008
Sales growth and margin improvements are expected to result in a surge in profits for Nufarm in fiscal 2009. The company forecasts an after-tax operating profit of Aus$220-230 million (US$210-219 million at current rate) in the year to July 31st 2009, a rise of some 40% over the latest guidance for fiscal 2008.
Among the major growth drivers predicted by the company are higher volume sales of key products such as phenoxy herbicides and glyphosate, and the insecticide, imidacloprid. It expects to see particularly strong demand and major share growth in new markets such as eastern Europe. Increased sales of higher-margin insecticides and fungicides are expected to boost profit margins, along with gains from restructured glyphosate production arrangements. Nufarm recently secured long-term glyphosate supply deals with Monsanto and several Chinese companies.
Nufarm expects to see growth from product introductions in new crop sectors such as: sugar cane, pasture, citrus and cotton in Brazil; cotton in the US; and small-grain cereals, maize and seed treatments in Europe. The company also expects to benefit from full-year contributions from recent acquisitions. Earlier this year, Nufarm acquired the UK agrochemical company, A H Marks, and the US pesticide firm, Etigra.
Nufarm’s latest earnings guidance for fiscal 2008 of Aus$155-160 million (US$148-153 million) is higher than the earlier forecast of Aus$145 million (US$138 million). Widespread flooding in the US Mid-West has reduced demand for glyphosate and phenoxy herbicides, while Australian winter crops have not benefited from ideal rainfall, the company points out. However, these markets are expected to produce strong earnings growth for Nufarm, along with “excellent outcomes in our other regional markets”, says managing director Doug Rathbone. Detailed results for fiscal 2008 are due to be released on September 25th.
Source: Nufarm News Release
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