Why the Nufarm (ASX:NUF) share price finished 7% higher today

The Nufarm Limited (ASX: NUF) share price ended the day higher after the company provided a financial update for the start of FY21.

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The Nufarm Limited (ASX: NUF) share price ended the day higher after the company provided a financial update for the start of FY21. At market close, shares in the Agrochemicals company finished at $5.02, up 7.9%.

Let’s take a closer look and see how the Nufarm business tracked for the period.

Financial highlights

The Nufarm share shot up today as investors appear to be upbeat at the company’s future earnings release.

According to its release, the company delivered a robust performance in the new financial year.

For the four months ending 31 January, Nufarm reported total group revenue of $845 million. This represented a lift of 17% on the prior corresponding period (1 October 2020 to 31 January 2021).

The company stated that it has seen growth in all crop protection regions and in its seed technologies business. In particular, the Asia Pacific region – Nufarm’s second biggest market – contributed revenues of $257 million, up 46% on the prior four months. Europe on the other hand, recorded $227 million, an 18% increase over the same timeframe. North America remained unchanged at $313 million for the period.

As a result, Nufarm revealed that improved season conditions in Australia and Europe are driving the company’s sales.

In addition, the company is progressing its net working capital towards management’s short-term target of 40% ANWC/sales. The metric refers to the average net working capital as a percentage of the last twelve months revenue (ANWC/sales). In laymen’s terms, this translates to the group’s diligence in striving for positive cashflow.

Lastly, the company noted that the strong trading conditions are continuing to run throughout February.

Nufarm will release its financial results for the first half of FY21 on 20 May 2021.

Management commentary

Nufarm managing director and CEO, Greg Hunt, hailed the favourable results, saying:

The positive momentum we saw in the second half of last financial year has continued with revenue growth in all regions and our Seed Technologies business.

While our major trading months are still ahead of us and uncertainties including currency translation and supply chain impacts of COVID-19 remain, improved seasonal and market conditions in Australia and Europe are driving a recovery in sales and these regions are expected to make a meaningful contribution to earnings growth in FY21.

Nufarm share price snapshot

In the last 12 months, the Nufarm share price has slipped around 7%, reflecting earlier headwinds faced by the company. However, since the beginning of this year, Nufarm has turned its fortunes around, with its shares up 21%.

Based on the current share price, Nufarm commands a market capitalisation close to $1.9 billion.

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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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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