Why the Nufarm (ASX:NUF) share price has rocketed today

The Nufarm Limited (ASX: NUF) share price has rocketed 7.69% this morning after the company released its FY20 results.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Nufarm Limited (ASX: NUF) share price has surged 7.69% to $4.48 in morning trade. This comes after the company released its FY20 results today.

This compares with the S&P/ASX200 Index (ASX: XJO) which is also up, 1.9% to 5,892 points.

Let's see how the Nufarm share price performed in its full-year for 2020.

How did Nufarm fare in FY20?

Nufarm reported mixed results for the financial year ending 31 July 2020. The crop protection and specialist seeds company delivered revenue of $2,847 million. This was a 7% uplift on FY19, underpinned by a strong second-half momentum across Australia, New Zealand (ANZ) and North America.

Nufarm's recorded a statutory net loss after tax of $362 million. This was attributed to weak seasonal conditions faced in the first 6 months and the effects of COVID-19.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) stood at $236 million, down 21%. Reduced earnings in Europe, seed technologies and North America for 1HY20 offset growth in ANZ and Asia.

The company's underlying net operating cash flow from continued operations increased by $137 million. This was primarily due to Nufarm's improved working capital management which more than covered the loss of incoming revenue.

Cash on hand was at $687 million with further undrawn facilities of $648 million should Nufarm need to access these funds.

The company has continued to suspend all dividends until further notice.  The board will revisit this decision in future based on the prevailing market conditions.

What did management say?

Nufarm CEO Greg Hunt acknowledged the difficult trading conditions. He said:

2020 has been an extraordinary year. The agricultural markets in which we operate across the globe have endured mixed seasonal conditions, industry-related supply issues and of course the tragedy and disruption of COVID- 19.

Mr Hunt said decisive steps had been taken to strengthen the business and improve returns. He added.

We have refocused our portfolio, strengthened our balance sheet and progressed key priorities to drive better performance from our continuing businesses. 

The successful completion of the sale of the South American businesses in April 2020 delivered up-front value for shareholders and has refocused our portfolio on the businesses and regions with higher margins and stronger cash flow.

The sale proceeds strengthened our financial position to allow us to better manage inherent industry volatility.

FY21 outlook for the Nufarm share price

Nufarm is working to improve cash generation and deliver an earnings recovery for its Europe operation. In addition, the company will look to continue the positive sales momentum in its North America and Asia Pacific regions.

The board is projecting net external costs to be in the range on $75–$85 million, excluding foreign exchange gains and losses.

Furthermore, depreciation and amortisation are predicted to be approximately $220 million, and capital expenditure at $180 million.

The company noted that this month, it had secured its first commercial sales and forward orders of its omega-3 canola oil to a major global salmon producer. This product is expected to yield significant value in the coming years.

The company will provide a trading update on 19 November and in its annual general meeting on 18 December.

The Nufarm share price is down by more than 27% from the beginning of the year. Today's result will offer some relief to shareholders as the Nufarm share price has not recovered anywhere near its highs above $9 since 2018.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

three men stand on a winner's podium with medals around their necks with their hands raised in triumph.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a happy end to the trading week this Friday.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A business person directs a pointed finger upwards on a rising arrow on a bar graph.
Share Gainers

3 ASX 200 stocks storming higher in this week's sinking market

Investors have sent these three ASX 200 stocks soaring this week. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Market News

Why Aeris Resources, Netwealth, Nova Minerals, and Paragon Care shares are dropping today

These shares are under pressure on Friday. Let's find out why.

Read more »

Two smiling work colleagues discuss an investment at their office.
Share Gainers

Why 4DMedical, Develop Global, EOS, and Maas shares are racing higher today

These shares are ending the week on a high. But why?

Read more »

A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.
Share Market News

Downer EDI wins $870m NZ highway maintenance contracts: What investors need to know

Downer EDI wins major New Zealand state highway maintenance contracts worth NZ$870 million, expanding its infrastructure portfolio.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Broker Notes

Ord Minnett names 2 ASX 200 shares to buy for massive returns

The broker sees a lot of value in these big names. Here's what it is recommending.

Read more »

Six smiling health workers pose for a selfie.
Healthcare Shares

Up 657% in a year, 4DMedcial shares rocketing another 20% today on big US news

ASX investors can’t get enough of 4DMedical shares today. Let’s see why.

Read more »