Why the Nufarm Share Price Exploded This Morning

Crop protection chemical maker Nufarm [ASX:NUF] has had a relatively good year. The Nufarm share price is about halfway to recovering from heavy losses sustained post-GFC. It’s up by over 60% for the year to date, and over 70% for the last 12 months. Part of that is thanks to the savings it made in its European manufacturing operations. Then, the company released strong half yearly results in late March.

Yesterday, Nufarm closed at around $7.04. This morning, it opened at $7.15. As of 11:15am, it’s trading up 9.34% at $7.73.

NUF nufarm share price 23 09 2015
Source: Google Finance
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It’s all thanks to Nufarm’s stellar FY15 results, released this morning.

Group revenues are up by a modest 4%, to $2.74 billion. But underlying NPAT is up 35%. Nufarm made a profit of $117.1 million.

Earnings per share are also up. In total, earnings rose from $0.096 per share to $0.117 per share. But not counting big one-off items, earnings rose from $0.281 to $0.396 per share.

Nufarm has plenty of cash to work with. Its net operating cash flow was $228.5 million. Its balance sheet now lists $391.4 million cash, up from $241.6 million last year.

Shareholders will get a taste of this success. The full year dividend is $0.10 per share, up 20% from last year.

Managing director and CEO Greg Hunt reported on the outlook. Despite upcoming weather events, low crop prices and other variables, he’s expecting a good year ahead. ‘The combination of cost savings benefits, margin expansion and revenue growth in a number of the company’s businesses is expected to result in another solid profit performance in 2016Beyond the current 2016 financial year, additional benefits resulting from the ongoing performance improvement program, along with profitable growth opportunities across products, crop segments and geographies, place the company in a strong position to deliver sustainable earnings growth and improved shareholder returns over the medium to long term,’ wrote Mr Hunt.

It will be interesting to see whether Nufarm becomes a reliable dividend player. But if you’re looking for something that will become a major income stream, you might want to seek out a stock with an established record of paying dividends.

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Eva Mellors,
Contributor, Money Morning

Money Morning Australia