Nufarm (ASX:NUF) share price leaps 15% as revenue soars

Shares in the Aussie agricultural company are shooting up today. Here's why.

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Key points

  • The Nufarm share price is soaring today
  • The company's latest trading update and outlook was released this morning
  • The agricultural company has reported a 36% increase in revenue for Q1 FY22

The Nufarm Ltd (ASX: NUF) share price is enjoying another good day on the ASX, currently up 15.05% to $5.35. It follows 4 successive days of gains for the company. Its shares are now up by 22% since Monday.

The developer and manufacturer of crop protection solutions and seeds released its latest trading update today. The update covers the first quarter of FY22. It reported an increase in revenue and strong adaptation to global supply demands.

Nufarm also released its outlook for the rest of the financial year. Let's take a look at what the company announced.

Nufarm share price surges on 36% revenue increase

The Nufarm share price is rocketing today on the back of the company's trading update for Q1 FY22 and outlook. The highlights included:

  • A substantial increase in revenue
  • Favorable trading conditions
  • Adjusted net working capital (ANWC)/sales remain within target of 35-40%.

Nufarm reported a 36% increase in revenue for the first quarter of FY22 (against the previous corresponding period), citing "favourable weather conditions" as a factor. New products also made up more than 20% of its revenue.

The company "expects earnings in FY22 will be heavily weighted for the first half of the financial year and is increasingly confident of revenue and earnings growth for the full FY22 financial year".

In fact, Nufarm predicts its revenue could increase to more than $4 billion by FY26, due to its existing and upcoming products, and above market growth at an expected 2.3%.

However, the company also reported it was experiencing "upward pressure on costs due to raw material costs and global logistics challenges which are being offset by the increased revenues".

What's next for Nufarm?

The Aussie grower is committed to adapting to global growth demands and challenges, including:

  • Catering to a growing global population (estimated 9.7 billion by 2050) and higher living standards by increasing yields
  • Using more sustainable agricultural practices, such as "biologicals, bio-stimulants, mechanical, electric and other novel solutions"
  • Reducing greenhouse gas emissions at manufacturing sites by 30% before 2030 and protecting crops

Among other essentials, Nufarm expects fuel demand to increase by 50% by 2050. On Tuesday, the farmer reported that it had entered into an agreement with BP to supply sustainable biofuels through its product, Nuseed Carinata oil.

All in all, 22 of its primary products target an addressable market valued at $6.6 billion (FY22 projected). Nufarm hopes to push its portfolio towards higher margin and growth products, with customer relevance front of mind.

Nufarm share price snapshot

Over the past 12 months, the Nufarm share price has increased by 7%. It reached its highest price of $5.60 in April 2021 and its lowest of $4.12 in September 2021.

The company has a market capitalisation of $2 billion and a price-to-earnings ratio (P/E) of 35.

Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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