Nufarm lifts first-half profit

Agricultural chemical company warns on Australian business conditions.

Nufarm has posted a sharp lift in first-half profit, buoyed by one-off tax credits, but has warned -- one week after announcing a sweeping operational restructure including the closure of two manufacturing plants -- that it expects business conditions in Australia will remain challenging for some time.

In the six months to January 31, Nufarm posted a net profit of $18.80 million, a 124% lift on the $8.39m recorded in the first half of the previous year.

The group noted that its interim profit had benefited from a number of one-off, individually immaterial credits to tax expense.

Revenue was $1.138 billion, a 21.8% increase on the previous corresponding period's $934.41m.

At the end of the first half, net debt was $1.02bn, compared to $743m at the end of the previous corresponding period. Net working capital was $1.33bn.

The agricultural chemical company will pay a fully-franked interim dividend of 3 cents on May 9 to shareholders on the register at April 11.

Nufarm said it anticipates business conditions will remain challenging in Australia.

"While much needed rainfall would drive increased applications of product, channel inventories are estimated to be high and pricing pressure is expected to continue for the balance of the year," the group said.

While some uncertainty remains in relation to likely seasonal conditions in several important markets, it is confident of generating improved profitability over the prior year.

The group added that its first half was buoyed by strong growth in South America, particularly in Brazil, which more than offset the impact of continuing drought conditions in Australia, as well as lower first half earnings from both North America and Europe.

The result comes a week after Nufarm announced it will book a one-off restructuring charge of $39 million, cut 105 jobs and close two manufacturing facilities as part of a reorganisation of its Australian operations.

The group said the reorganisation -- will include the phased closure of the Welshpool and Lytton manufacturing facilities, the closure of a number of regional service centres, and a significant streamlining of management resources across the business -- was necessary to become more responsive to cost pressures and increase its focus on product development.

One-off restructuring costs of up to $39m will be booked in the current financial year, of which approximately $28m will be a non-cash impact.

The changes are to be implemented over a two-year period and once completed are expected to garner up to $13m in annual cost savings.