BusinessDesk: Nufarm to beat underlying profit guidance, writes off A$28M

Agricultural chemicals company Nufarm said underlying net profit is likely to exceed its guidance but the settlement of a disputed receivable will see it collect only about 23% of the amount originally billed.

In July, the Australia-based company said it expected underlying annual net profit before one-off items, such as the disputed receivable, would be between A$88 million (NZ$112.1 million) and A$94 million.

Now it says profit will exceed the top end of this range. The company will release its results for the year ended July 31, which are still subject to final audit, on September 28.

However, Nufarm will recover only A$13.5 million of the receivable valued at $58.9 million at January 31 this year.

The company had already written down the receivable’s value in June to A$25 million and the total after-tax impact of the agreement will mean A$28 million off Nufarm's bottom line, the company said.

“The company gave detailed consideration to a number of matters in arriving at the decision to settle the dispute, including the management time that would have been consumed by further hearings to fully and finally determine the issues between the parties, litigation risk and the ongoing commercial relationship between the parties,” said managing director Doug Rathbone in a statement.

Nufarm reported a A$22.7 million net loss for the year ended July 2010 compared with an A$80.5 million net profit the previous year.

Nufarm shares closed at A$3.95 on Friday on the ASX, having fallen from A$5.80 in February but have recovered from their A$3.59 low last month.

Nufarm's NZX listed perpetual, subordinated, unsecured, redeemable exchangeable notes last traded on Friday at $91.498 per $100 face value, up from as low as $64 in September last year.