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

A man in his 30s with a clipped beard sits at his laptop on a desk with one finger to the side of his face and his chin resting on his thumb as he looks concerned while staring at his computer screen.
Broker Notes

Buy, hold, sell: Life360, Northern Star, and Sigma shares

Are these popular shares buys? Here's how analysts rate them.

Read more »

Business man marking buy on board and underlining it.
Broker Notes

6 ASX All Ords shares elevated to strong buy status after March sell-off

The ASX All Ords fell 8% in March after the US and Israel attacked Iran and oil and gas prices…

Read more »

Red buy button on an Apple keyboard with a finger on it.
Broker Notes

Brokers name 3 ASX shares to buy right now

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

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Market News

Why Beetaloo, Fortescue, Orora, and Whitehaven Coal shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Man in a business suit leaps off a boulder in front of a blue sky.
Share Gainers

3 ASX 200 stocks surging 13% to 36% in this shortened trading week

Investors sent these three ASX 200 stocks flying higher following the Easter break. But why?

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Share Gainers

Why Amaero, Mesoblast, Telix, and Tivan shares are charging higher today

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

Read more »

A young couple stands next to a real estate agent in an empty apartment they are inspecting.
Real Estate Shares

Mirvac shares sink to their lowest level since 2015. Is this ASX property giant back on the radar?

Multi-year lows put Mirvac shares back on investors’ watchlists today.

Read more »

surprised child reading all about asx 200 shares in a newspaper
Share Market News

Why Magellan, Telix and Fortescue shares are grabbing headlines on Friday

Telix, Magellan, and Fortescue shares are catching ASX investor interest today. But why?

Read more »