The renamed trans-Tasman chemicals group Nufarm may lift its
stake in struggling rural merchandiser IAMA as talk of another bout
of rationalisation in the sector builds.
A spokesman for Nufarm said yesterday the company had bought the
6 per cent stake in 1998 because it was "not going to stand on the
sidelines" and would not rule out raising the stake.
Nufarm, formerly Fernz Corp before switching its home base from
New Zealand to Australia, bought the IAMA stake in 1998 for $2 a
share. The shares have since slid to $1.24.
Nufarm is seen as being vitally interested in having a
competitive distribution sector because it is worried its margins
could be hurt in a market consolidation. IAMA is one of at least six
distributors Fernz uses, including Futuris Corporation's Elders and
Wesfarmers-Dalgety.
"Distribution in the Australian market is a part of the business
that takes a fair cut (of the company's margin)," the spokesman
said.
"We did not invest in IAMA to make a profitable investment. In
the distribution market generally we are not going to stand on the
sidelines."
Nufarm, which has a crop protection business making a range of
agricultural chemicals, yesterday reported net profit of $10.66
million for the eight months to January, consistent with a move to
switch its end for year balance date from May to July. Interim
dividend is 6c. The company's shares have risen from $2.70 last
month to $3.37, largely because the company will join the new ASX200
index when it is instituted next week.
The company said it was on track for a full-year profit of $50
million, driven by large seasonal contributions of businesses in
North America and Europe.
In addition to crop care, the company is also a global supplier
of industrial and specialty chemicals.
"We remain extremely ambitious in terms of our growth outlook. We
believe that as the (chemical) industry continues to rationalise
internationally that opportunities will come Nufarm's way," the
spokesman
said.
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