Nufarm: Resilient performance

About the author:

Author name:

By Belinda Moore

Job title:

Senior Analyst

Date posted:

17 November 2023, 7:30 AM

Sectors Covered:

Agriculture, Food & Beverage, Travel and Chemicals

• While EBITDA fell slightly in FY23, we note the company was comping two big years. Pleasingly, Nufarm's (ASX:NUF) performance was stronger than peers. Its Seed Technologies result was the highlight, while APAC disappointed. While NUF reported a cash outflow, it was better than expected which meant its gearing metrics fell back into its target range.
• Given challenging operating conditions will remain in the 1H24, modest EBITDA growth at best is likely in FY24, with a weak 1H followed by growth in the 2H. However, we expect NPAT to fall. We have revised our forecasts but expect more material downgrades to consensus estimates. In line with its FY26 revenue aspirations, earnings growth should accelerate in FY25/26.
• Given near-term earnings uncertainty remains, we retain a Hold rating. However, we recognise that there is material upside if NUF delivers on its FY26 targets.

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