Home' Nufarm Half Yearly Report : Half Yearly Report 2014 Contents 02
NUFARM LIMITED HALF YEAR REPORT 2014
REPORT TO SHAREHOLDERS
SIX MONTHS ENDED 31 JANUARY 2014
Nufarm Limited generated a
20 per cent increase in underlying
earnings before interest and tax
(EBIT) of $56.7 million. This compares
to $47.3 million in the previous half
Group revenues increased by
22 per cent to $1.14 billion (2013
first half: $934 million). On a constant
currency basis, revenues increased
by 11 per cent.
The statutory net profit after tax
(NPAT) was $18.8 million, compared
to $8.4 million for the first six months
of the previous financial year. There
were no material items reported in
the first half of 2014. The reported
NPAT has benefited from a number
of one-off, individually immaterial
credits to tax expense. The company
expects the current full year effective
tax rate to be in the range of
29 per cent to 30 per cent.
Earnings per share were 4.7 cents,
compared to 0.4 cents in the first half
The 2014 half year result was driven
by strong growth in South America
-- Brazil, in particular -- which more
than offset the impact of continuing
drought conditions in Australia, and
lower first half earnings from both
North America and Europe.
Net debt at 31 January was
$1.02 billion, compared to $743 million
at the end of the previous first half
period. Net working capital was also
higher at $1.33 billion (31 January
2013: $1.03 billion).
Directors declared a fully franked
interim dividend of 3 cents per share
(2013 interim dividend: 3 cents).
The interim dividend will be paid on
9 May 2014 to the holders of all fully
paid shares in the company as at the
close of business on 11 April 2014.
There is no conduit foreign income
attributed to the dividend.
The Dividend Reinvestment Plan
(DRP) will be made available to
shareholders for the interim dividend.
Directors have determined that the
issue price will be calculated on the
volume weighted average price of
the company's ordinary shares on the
ASX over a period of 10 consecutive
trading days commencing after the
record date and concluding prior
to the date of allotment of ordinary
shares under the plan. The last election
date for shareholders who are not yet
participants in the DRP is 14 April 2014.
The board has determined that, for
this dividend payment, no discount
will apply to shares issued under the
DRP. Shares issued under the DRP
will rank equally in all respects with
existing ordinary shares.
Net external interest expense was
$30 million, higher than in the previous
period ($20.6 million). This reflected
a higher level of average net debt
through the period. The early
refinancing of the company's
syndicated bank facility resulted in
debt establishment costs associated
with that facility being written off.
Net foreign exchange losses relating
to financing activities were materially
lower than in the first half of the
previous year ($3.5 million versus
$9.2 million). However, since 31
January, significant currency weakness
in a number of developing markets
-- where hedging is not possible -- has
resulted in a further unrealised foreign
exchange loss of some $5 million.
Future movements in those currencies
will determine the extent to which
any of this is reversed by year end.
Total financing costs were $40.8 million
(2013 first half: $34 million).
The company's effective tax rate in the
first half has benefited from a number
of one-off, individually small credits to
tax expense. The company expects
the current full year effective tax rate
30 per cent.
The business recorded a negative
net operating cash flow of $296 million,
compared to a cash outflow of
$148.2 million in the previous period.
This has been driven by a substantial
increase in net working capital arising
from the rapid growth of the business
in the first half. The relatively long-
dated receivables applying to the
growing South American business
and higher inventory levels, generally,
have impacted operating cash flow
in the first half. With second half
collections in Brazil and shorter terms
associated with key sales periods
in other major markets, the business
is expected to generate strong cash
flows in the second six months of
The first half period encompasses the
key selling season in South America
and the summer cropping season in
Australia. The larger cereal growing
season in Australia and key seasons
and demand periods in Nufarm's
major northern hemisphere markets
occur in the second half of the
South America's largest market,
Brazil, experienced average climatic
conditions for most of the period
and Nufarm generated very strong
revenue and earnings growth. This
contrasted with the performance
of the Australian business which
was again impacted by hot and dry
seasonal conditions in the major
summer cropping regions of
Queensland and northern NSW.
Gross profit was 26.9 per cent of sales,
in line with the first half of the previous
year (27.0 per cent). Net expenses
were down, as a proportion of sales
(22.4 per cent versus 23.1 per cent),
as were corporate (head office) costs.
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