Agricultural chemical producer Nufarm has returned to full year profitability but disappointed shareholders with its dividend payout.
Nufarm made a net profit of $72.6 million in the year to July 31, reversing its $49.9 million loss from the previous year.
Managing director Doug Rathbone said earnings had improved despite mixed conditions in key markets.
Trading conditions in Australia were average and positive in Brazil, but the US and Europe were below average.
“In Australia there’s been no repeat of the locust plague,” he said.
“In Europe it was a very cold and wet winter, which wasn’t good for insecticide sales.”
The result was in line with the profit guidance the company provided earlier this year.
But Bell Direct analyst Julia Lee said the three cent a share fully franked final dividend to shareholders was well below expectations.
Nufarm failed to pay an interim dividend in 2010/11 and analysts had been expecting a payout of 11 cents per share now that it was back in the black.
The three cent dividend sparked a fall in Nufarm shares, with the stock closing eight cents, or 1.37 per cent, lower at $5.77.
“The results were in line with expectations but the reason its shares were sold up was the dividend was disappointing,” Ms Lee said.
Ms Lee said the lower dividend was probably due to the $42.8 million in one-off costs the company incurred during the year to July 31.
The major cost item on Nufarm’s books for the year was $30.4 million in costs from its settlement of legal action brought against it by shareholders.
The shareholders alleged they suffered losses as a result of the company’s failure to adequately inform the market of the impact of the declining international glyphosate market on its financial position during the 2009/10 financial year.
Nufarm denied the allegation but settled the matter in August, 14 months before the matter was scheduled to go to trial.
The company also incurred $5 million in restructuring costs in the 2011/12 fiscal year.
The herbicides and pesticides producer also forecast an improved underlying performance in the year ahead.
But given the company’s reliance on weather and insect conditions to drive its earnings, its results tended to be volatile, Ms Lee said.
Nufarm was trying to rectify that by diversifying into seed technologies but while growth in the product for the year was 39 per cent, it was still only five per cent of the business, she said.
