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A continuation of dry conditions in Australia and an unusually
short spring season in the United States resulted in lower
demand and considerable margin pressure in both markets.
These negative impacts were more than offset, however, by
another strong performance from the South American business,
an increased profit contribution from the seeds business and
lower corporate costs.
The range of seasonal impacts
experienced in the 2014 financial
year again underlined the importance
of a geographically diverse business
and Nufarm’s expansion into the
Nufarm’s crop protection business grew
sales by 16 per cent to $2.48 billion
and underlying EBIT by four per cent
to $202.1 million. Crop protection sales
accounted for just over 94 per cent of
group revenues and generated an
average gross margin of 26 per cent,
which was in line with the previous year.
The seed technologies segment
generated revenues of $144 million,
an increase of 10 per cent on the
previous year ($132 million) and grew
underlying EBIT by 15 per cent to
$37.2 million. The segment generated
an average gross margin of 51 per cent.
Corporate (head office) costs were
$38.6 million, down five per cent
on 2013. Total expenses were up
on the previous year, but represented
a slightly lower ratio to sales than in
the prior period.
A key focus during financial year 2014
was the implementation of a number
of programs to improve working capital
efficiencies. A significant reduction in
year-end working capital and net debt
reflected good progress on this front.
Operating segments summary
The table adjacent provides a summary
of the performance of the operating
segments for the 2014 financial year
and the prior period.
The Australian and New Zealand
business generated sales of
$605.8 million, which was in line
with the previous year ($604.4 million).
Underlying EBIT was $33.9 million,
slightly down on the $35.4 million
generated in the prior period.
Australian sales were down year on
year, reflecting lower demand due
to a continuation of dry conditions
throughout much of the country.
Summer cropping conditions featured
unusually low insect and weed pressure,
and fungal disease for a second
consecutive year, and fallow herbicide
applications were well below normal.
The challenging conditions led to
pressure on both pricing and margins.
With good rainfalls in many cropping
regions, market conditions improved
considerably in the final quarter of
the reporting period, providing an
opportunity for channel stocks to
normalise, lifting sentiment, and
giving the Australian business a
much more positive platform to
start the new financial year.
A re-organisation of the Australian
business was announced during the
year. Changes to the manufacturing
base – to be implemented over a
two-year period – will reduce fixed
costs and improve utilisation of
production facilities. A stronger focus
on product development and customer
service is also expected to contribute
to improved business performance
over the medium term.
Domestic sales in New Zealand
were in line with the previous year
but generated a slight improvement
in margin contribution. A record year
for the dairy industry, and strengthening
returns in the sheep and beef sectors,
as well as key horticultural crops,
underpinned local demand.
Asian crop protection sales were
$140.9 million, an increase of
approximately 13 per cent on
the previous year ($125.2 million).
Underlying EBIT was largely unchanged
at $19.5 million (2013: $19.6 million),
with additional investments being
made in new product development
and an expansion into new markets
segments, as well as regional markets
such as Vietnam and Korea.
The Indonesian business recorded
just over 25 per cent sales growth in
local currency, driven by new product
launches and increased sales in the
important rice and vegetable segments.
Year ended 31 July
(%) 2014 2013
0.2 33,903 35,352
140,885 125,201 12.5 19,481 19,580
555,521 468,253 18.6 56,420 57,245
- 0.5 20,638 42,153 -51.0
662,512 431,440 53.6 71,622 40,595 76.4
Total crop protection 2,478,275 2,145,604 15.5 202,064 194,925
9.7 37,160 32,449 14.5
n/a (38,617) (40,571) -4.8
2,622,704 2,277,292 15.2 200,607 186,803
NUFARM LIMITED ANNUAL REPORT 2014 | 11
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