Hot weather, forex losses send Nufarm's profit tumbling
Agricultural chemicals supplier Nufarm has slashed its outlook for the full fiscal year after booking a 53 per cent fall in first-half profit.
Hot, dry conditions in Australia had reduced demand for crop protection products and it was also hurt by foreign exchange losses.
"We are an ag business, and therefore we are exposed to seasonal and climatic conditions," managing director Doug Rathbone said during a market briefing on Wednesday. "But from the crop protection demand perspective, the season in Australia has been exceptionally bad."
Nufarm booked a 53.5 per cent fall in net profit to $8.4 million for the six months to January 31.
Net profit was dragged back by $9.2 million of foreign exchange losses. In the previous corresponding period, Nufarm made a foreign exchange gain of $14.4 million.
Mr Rathbone said that in the first half the market for crop protection products had been tough as a result of hot, dry weather.
"We will not make up the lost ground from the first half and a poor start to the second half."
Consequently, Nufarm is now expected to generate underlying earnings before interest and tax within a range of $180 million to $200 million, below that of the previous year.
Mr Rathbone said Nufarm's business in South America was strong, with high crop prices driving an increase in planted acreage and resulting in strong demand for crop protection products.
Nufarm declared a steady interim dividend of 3¢, fully franked.