Home' Nufarm Annual Report : Nufarm Half Year Report 2017 Contents 05
NUFARM LIMITED HALF YEAR REPORT 2017
REPORT TO SHAREHOLDERS CONTINUED
SIX MONTHS ENDED 31 JANUARY 2017
were driven mainly by Brazil, with
growth from new products, extensions
into new crops and strong sales of a
Sumitomo-sourced product that
controls the white fly insect.
Fungicide sales were up by five per cent
to $123 million, with margins ahead of
the prior year. The fungicide portfolio
performed well in the period, with
most regions contributing to the
growth. Main contributors to the
result include Mancozeb, Fludioxinil
and the copper-based products.
The ‘other products’ category sales
were up two per cent to $123 million.
The growth was mainly driven by
the Croplands equipment business,
based in Australia. Aided by a record
grain harvest in Australia and
increased demand from growers,
Croplands was able to increase sales
by 20 per cent compared to the first
half last year.
The company’s seed technologies
segment includes sales of seeds,
managed under our Nuseed business,
and seed treatment chemistry.
Revenues in this segment were
$50.6 million, 21 per cent ahead of
the prior period sales of $41.7 million.
The segment generated a loss of
$0.2 million at the underlying EBIT
level, compared to a $4.4 million
loss in the prior first half.
A combination of higher sales
volumes and improved gross margin
percentage delivered a much
improved result in the first half. All
regions performed well, with Australia
making a good contribution due to
higher collections of canola end point
royalties from the strong 2016 farmer
saved seed harvest. Europe saw
growth in its sunflower business,
and the Brazilian business achieved
significant growth in sorghum and
The company’s omega-3 canola
program achieved numerous
milestones in the half, with the key
achievement being the lodgement
of the Australian registration package
on 10 February. Regulatory filings are
also expected to be lodged in the
United States and Canada before
the end of this month.
This unique canola will provide
long-chain omega-3 oils, similar
to those found in fish oil, using
a sustainable land-based source.
It has been developed through
collaboration between Nufarm’s
wholly owned subsidiary, Nuseed;
the Commonwealth Scientific and
Industrial Research Organisation
(CSIRO); and the Grains Research and
Development Corporation (GRDC).
Pending regulatory approvals,
commercialisation of the omega-3
oils is expected to commence
in 2018 or 2019.
Balance sheet management
Net debt at 31 January 2017 was
$856 million compared to $927 million
at 31 January 2016. Net debt
benefitted from the net cash inflow
from material items of $39 million.
Currency translation had a positive
impact on the net debt figure
($22 million), with the higher Australian
dollar resulting in reduced debt
associated with the company’s US
dollar denominated high yield bond.
On a constant currency basis, net
debt at 31 January was $878 million.
Average net debt was lower than
in the previous six-month period
($805 million versus $857 million),
aided by continued excellent working
Management continued to focus on
driving further efficiencies in working
capital management, with average
net working capital to sales down to
37.1 per cent (2016 1H: 41.6 per cent).
Average net working capital over
the last 12 months was $1.10 billion,
compared to $1.14 billion in the prior
period. This reduction was achieved
despite the sales growth recorded
in the half. Inventories and payables
were the main drivers of the reduction
in the average net working capital.
Gearing (net debt to net debt plus
equity) was 35.8 per cent (2016 1H:
38.8 per cent).
The average leverage ratio (net
debt divided by the 12-month rolling
EBITDA) was 2.21x (2016 1H: 2.84x).
Cost savings and performance
The company continues to make
good progress on its cost savings and
performance improvement program,
which aims to deliver a net benefit
of $116 million in underlying EBIT by
the end of the 2018 financial year.
Total $1,360 million
* Other includes equipment, adjuvants, PGRs and industrial.
Sales by product segment
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