Record grain market prices driving strong demand for crop protection products have helped lift Nufarm's statutory net profit by 61 per cent to $99 million in the first half of 2021-22.
Underlying net profit after tax more than doubled to $133m, supported by notable earnings improvements in its North American and the Asia-Pacific markets.
The chemical manufacturer has also harvested benefits from its business transformation program and an expanding footprint in seed technologies.
"This is a very strong result, validating our strategy and reflecting good management through volatile global conditions," said Nufarm managing director, Greg Hunt.
"While we have benefited from healthy seasonal demand in our markets and higher grain prices, we are also reaping the outcomes of the hard work undertaken in recent years to transform the company."
Nufarm subsequently announced its first interim dividend since 2018, an unfranked four cents a share to be paid on June 17.
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Melbourne-based Nufarm achieved a 31pc lift in revenue to $2.2 billion for the six months to March 31, and has reported a subsequent 41pc rise in underlying earnings before interest tax, depreciation and amortisation to $330m.
"We see a credible path to over $4b in revenue by 2026," Mr Hunt said.
"Our seed technologies business aspires to revenues of between $600m and $700m in 2026."
Seed business
The company's seed platforms continued to hit strategic milestones and represented significant growth opportunities.
Revenue in the category was up 28pc for the half to $185m on the back of strong demand for Nuseed's hybrid canola in Australia, South America and Canada as bullish grain markets encouraged more planting activity.
Increased sorghum sales in Brazil, the US and other markets, sunflower seed growth markets in the Americas and increased sales of Omega-3 canola Aquaterra for the farmed salmon industry were also notable features of the period.
Nuseed has also witnessed rapid expansion of its Carinata biofuel seed demand on top of a strategic offtake and market development agreement with energy giant BP.
Crop chemicals
Overall crop protection underlying EBITDA jumped 40pc, but more notably in North America it was up a whopping 184pc to $93m and up 45pc in the Asia Pacific to $99m.
Europe had the best crop chemical EBITDA performance at $120m, but the figure was actually down 1pc on the same period a year ago.
Nufarm registered 150 new or expanded products globally in the six month period.
Our transformation and continued focus have allowed us to navigate the uncertainty and volatility of the current global climate
- Greg Hunt, Nufarm
Mr Hunt said despite concerns around global supply chains and inflation, the growth outlook and prospects for the farm sector remained clear and the company's focus on core crops and key geographies was delivering strong results.
In fact, global uncertainty and volatility in relation to active ingredient pricing and global supply chain and logistics challenges actually triggered a surge of earlier than normal sales in the first half.
"Our transformation and continued focus have allowed us to navigate the uncertainty and volatility of the current global climate to deliver pleasing earnings growth for shareholders," he said.
"We have a strong balance sheet, with leverage at 1.1 times (net debt to underlying EBITDA) and the outlook for the full year remains positive."
Net debt was down 6pc to $494m.
Upbeat outlook
However, Mr Hunt said Nufarm's full year results were likely to be proportionately more weighted to the first half compared to last year, because of elevated forward sales activity.
Even so, he said current industry conditions were highly favourable.
Grain prices were likely to remain elevated driving increased planting and demand for crop protection products.
The fundamental need to grow more food to meet the needs of growing populations was ever present.
"Our five-year growth aspirations remain unchanged," Mr Hunt said.
The financial results impressed share market analysts at Goldman Sachs.
The broking services firm noted the first half performance was significantly above expectations, with EBITDA a notable 46pc better than it had tipped, although the strong underlying conditions had been "amplified by demand pull-forward across the Australia and European segments".
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