Nufarm shares surge as FY result beats expectations
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More news: Nufarm shares rocketed on the ASX after the agribusiness reported a better-than-expected full-year result, despite swinging to a loss.
Nufarm shares were up 9% to $3.99 by 11:05am AEDT, having shed more than 20% since January.
Citi analysts said that Nufarm's full-year top line and underlying EBITDA results came in ahead of expectations, driven by volume uplifts across its crop protection business. However, pricing continues to be a headwind, with its impacts more than offsetting the uplift in volumes, they noted.
What they said: "[Nufarm] has reiterated its FY26 revenue aspirations; there is a clear caveat here noting that this is subject to a return of long-term average pricing in corp protection," Citi's analysts said.
"We think pricing is likely to continue to drag in the near term for [Nufarm] and its industry."
Nufarm swings to FY loss
The news: Agricultural chemicals supplier Nufarm swung to a full-year net loss, with operating profit meeting the midpoint of its reduced guidance range, as the company grappled with a downturn in trading conditions during the year.
The numbers: Nufarm reported a statutory net loss after tax of $5.6 million, compared to a profit of $111 million in FY23.
Underlying EBITDA reduced 29% year on year to $313 million. In August, the company lowered its guidance range from between $350 million and $390 million, to between $300 million and $330 million.
Group revenue declined 4% to $3.3 billion and operating profit fell 73% to $65 million.
The company did not declare a final dividend, having paid out 5 cents per share in FY23.
The context: Nufarm said that the profit slide was "due mainly to competitive market conditions", which negatively impacted selling prices and margin in many parts of the business.
It noted that FY24 was challenging as the competitive markets for crop protection products resulted in declines in selling prices and margin pressure.
However, the company said it is seeing "solid" end use demand and stable active ingredient prices for its crop protection products, and therefore does not expect to see the same deflationary impact from falling active ingredient prices that impacted FY24.
The sources: ASX announcement, Citi research
