Agricultural chemicals group, Nufarm says it's aiming to boost earnings in 2012 after another difficult year in 2011.

But while 2011 was tough with more write-downs, it has made an impact in cutting debt, lifted earnings before one off items, and put behind it a lingering dispute over receivables that was finally sorted out earlier in the month.

The group yesterday reported a net loss of $49.9 million for the financial year, more than doubling the $22.6 million loss in the previous corresponding period.

That was after $148 million in losses from material items, including an impairment charge of $70 million on the carrying value of Nufarm's assets in Brazil.

The company's annual revenue was down 4% to $2.08 billion and no dividends will be paid by Nufarm for another year.

Excluding those one off items, net profit rose 68% to $98.28 million, compared to $58.6 million in the prior year.

"With increased certainty relating to its financing position, a strong focus on business improvement initiatives and further momentum behind the company's product diversification strategy, Nufarm is well placed to achieve operating profit growth in the 2012 financial year," Nufarm said in yesterday's statement.

Shares in Nufarm rose 9c or 2% to $4.32.

The group says it is looking to lift operating profit in the 2012 financial year and continue to diversify its product portfolio away from the weed killer glyphosate.

"With increased certainty relating to its financing position, a strong focus on business improvement initiatives and further momentum behind the company's product diversification strategy, Nufarm is well placed to achieve operating profit growth in the 2012 financial year," Nufarm said in a statement.

Nufarm said on Wednesday the general outlook for the agricultural sector was positive, and, given favourable weather conditions, cropping activity in Nufarm's major markets should be strong.

(We have seen that with the recent very positive quarterly reports on our winter and summer crops from the Australian Bureau of Agricultural and Resource Economics.

That move away from the glyphosate weed killer saw Nufarm elected not to participate in some glyphosate market segments where margins were unacceptable in the 2011 year.

The company said that glyphosate sales represented 20% of total revenues (down from 28% in 2010) and generated an average gross margin of 15% (2010: 12%).

"Insecticide sales increased 24% year on year; fungicide sales were up by 18% and sales of non-glyphosate herbicides increased marginally.

"Seed and seed treatment sales were up strongly (57%), assisted by the first full year of earnings contributions from businesses acquired during the 2010 financial year."

Sumitomo Chemical Company of Japan all but controls the company with its 23% of the issued shares, up from 20% a year ago.

The Japanese group however is facing big unrealised losses on that stake, having paid around $14 a share for the original 20% holding.

And Wesfarmers plans to sell its Premier Coal business in WA to Chinese-owned Yancoal Australia for $296.8 million, according to a statement yesterday.

The Premier Coal mine, in Collie, 200 kilometres south of Perth, produces about 3.5 million tonnes of thermal coal a year which is sold Western Australia's state-owned power generator Verve Energy.

Wesfarmers said it would recognise a pre-tax profit of about $90 million on the sale, which likely would be included in its financial results for the second half of the current financial year.

Yancoal, headquartered in Sydney, is a wholly-owned subsidiary of China's Yanzhou Coal Mining Company.

Yancoal already operates five mines in NSW and Queensland, which produce about 11 million tonnes of thermal and metallurgical (coking) coal each year.

The sale of Premier Coal remains subject to approval from the Foreign Investment Review board and Chinese government authorities, Wesfarmers said.

Wesfarmers Limited Managing Director, Richard Goyder, said in the statement yesterday: "Having now completed the strategic review process, we are pleased to announce the agreement to sell the Premier Coal mine and believe that the sale reflects the best outcome for Wesfarmers' shareholders and the business."

The deal is subject to approval from the Australian Foreign Investment Review Board and Chinese government authorities.

Wesfarmers coal businesses will now be based on the Curragh export mine in the Bowen Basin in Queensland and an interest in the Bengalla mine in the Hunter Valley of NSW with Rio Tinto's Coal and Allied.

Wesfarmers shares rose 19c to $31.74 yesterday.

And the ACCC has cleared SABMiller to buy local brewer Foster's for $10.7 billion, saying the takeover won't lessen competition for the supply of beer.

The Australian Competition and Consumer Commission said it wouldn't oppose the proposed takeover of Foster's by SABMiller, in a statement released yesterday.

"The ACCC has formed the view that the proposed acquisition is not likely to result in a substantial lessening of competition for the supply of beer," ACCC Chairman Rod Sims said in the statement.

The ACCC said it had carried out a comprehensive review and sought comment from competing breweries, supermarket retailers, distributors, licensed venues and bottle shops.

SABMiller currently owns half of Pacific Beverages, which makes the Bluetongue brand of beers, in a joint venture with Coca-Cola Amatil (CCA).

SABMiller and CCA will end the joint venture, with SABMiller buying CCA out to own both Foster's and Pacific Beverages.

The ACCC said the removal of Pacific Beverages as an independent beer producer and supplier would be unlikely to raise substantial competition concerns as Pacific Beverages was not a significant force in the Australian beer market and other competitive constraints would operate on SABMiller after its takeover of Foster's.

"Post acquisition, the merged firm will continue to face competition from Lion Nathan, the second largest player in the Australian beer market," the Commission said.

"Competition from smaller beer suppliers, such as Coopers and micro breweries, parallel imports and control brands supplied by the major supermarkets will also constrain the merged firm," the ACCC said.

Copyright Australasian Investment Review.
AIR publishes a weekly magazine. Subscriptions are free at www.aireview.com.au