Nufarm Limited (ASX: NUF) - Australia’s dry weather hit to $15.6 million loss in FY18

  • Sep 26, 2018 AEST
  • Team Kalkine
Nufarm Limited (ASX: NUF) - Australia’s dry weather hit to $15.6 million loss in FY18

Nufarm Limited collapsed to $15.6 million loss for fiscal year 2018 compared to $114.5 million profit after tax last year.  Early this morning the company announced its long awaited full year results to 31 July 2018 along with a fully underwritten pro rata entitlement offer to raise $303 million.

Crop protection company, Nufarm Limited said it posted an annual net loss after tax of $15.6 million due to a writedown of its Australian business amid dry weather conditions on the east coast and lower earnings during the reporting period. The company managed to show growth in revenue by 6% to $3.31 billion but the underlying net profit after tax (UNPAT) before material items slumped to $98.4 million, down by 28% on the previous year’s NPAT of $135.8 million. Underlying earnings before interest and tax (EBIT) slipped by 12% to $265.1 million and EBITDA was down by 1% to $385.7 million. Resultantly, earnings per share of the investors was blown out by 40% to 28.2 cents per share.

This downward shift in the financial results is said to be sown out of the dry Australian autumn conditions, and ongoing drought into winter in the eastern and southern states. However, this negative impact of Australian drought was largely offset by the underlying EBITDA contribution from the European acquisition, as stated by the company. This comes after the company acquired US$575 million of crop protection products portfolio, from FMC Corporation in February 2018 and from Adama and Syngenta in March 2018, for US$85 million and US$490 million, respectively. Average net working capital to sales increased to 40.3% from 36.8%, with higher than normal inventories in Australia.

Did you hear that the final dividend is 8 cents per security? No, that’s wrong. The company has wrongly mentioned the incorrect amount of 8 cents in the notification of dividend rather the actual final dividend announced by the company is 6 cents per security, duly rectified by the company in an updated release.

FY18’s final dividend of 6 cents per security, which makes full year dividend to 11 cents, is down from previous year’s final dividend of 8 cents. This 100% unfranked final dividend is payable to shareholders who hold securities on 5 October 2018 with a payment date of 2 November 2018.

Notwithstanding the tough drought conditions and losses incurred in FY18, Nufarm stood positive for FY19. It expects to deliver underlying EBITDA between the range of $500 million to $530 million for the fiscal year 2019, underpinned by full year contribution from European acquisitions. The outlook for FY19 is on the brink of average seasonal conditional across most of the selling period. However, there still lies some level of uncertainty stemming from currency movements and volatility across the industry.  

Along with the release of FY18 results, company also declared fresh capital issue offer to raise $303 million. The company said to undertake a fully underwritten pro rata entitlement offer for $303 million with an objective to de-risk its balance sheet and support the company’s ongoing business transformative strategy. The offer is said to be tabled to both retail and institutional investors with an exchange ratio of 3 new Nufarm shares for every 19 existing Nufarm shares at a discounted issue price of $5.85 per new share. Record date of the offer is fixed to 1 October 2018.

Nufarm’s shares continued to rest in trading halt. The last traded share price was $6.70. Over the past 12 months, the stock has seen a performance change of -23.43% while it most recently traded at a PE of 17.880 x with market capitalization of $2.2 billion.

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