Hot weather, forex losses send Nufarm's profit tumbling
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.
Frequently Asked Questions about this Article…
Nufarm's net profit fell 53.5% to $8.4 million for the six months to January 31, according to the company's first-half results.
The fall in profit was driven by a combination of factors: hot, dry weather in Australia reduced demand for crop protection products, and Nufarm also recorded $9.2 million of foreign exchange losses in the period.
Foreign exchange had a material impact — Nufarm booked $9.2 million of FX losses in the first half, compared with a $14.4 million FX gain in the prior corresponding period.
Managing director Doug Rathbone said Nufarm is exposed to seasonal and climatic conditions and that the Australian season has been 'exceptionally bad' from a crop protection demand perspective, contributing to the weak first-half performance.
Nufarm warned it will not make up the lost ground from the first half, noting there was also a poor start to the second half, which informed its downgraded outlook.
Nufarm now expects underlying earnings before interest and tax (EBIT) to be in a range of $180 million to $200 million for the full fiscal year, which is below last year's level.
Nufarm said its South American business was strong: high crop prices have encouraged increased planted acreage and strong demand for crop protection products in that region.
Yes — Nufarm declared a steady interim dividend of 3 cents per share, fully franked.
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