Sharechat Logo

Glyphosate price collapse hits Nufarm earnings

Tuesday 30th March 2010

Text too small?

Nufarm, the Melbourne-based global crop protection company, made a A$40 million loss in the six months to January 31 as global prices for the weedkiller glyphosate pole-axed inventory and forced price support to retain share in key markets, especially the United States.  

However, a bounceback is expected in the second half, with a headline net profit of between $80 million and $100 million forecast for the full year to July 31, the company said in a statement to the NZDX, where Nufarm Finance (NZ) Ltd has debt securities listed.

Nufarm is the amalgamated entity created after merging with its parent, one-time NZX-listed Fernz Corporation, in 2000.

A combination of adverse climatic conditions in European markets during the period and price-cutting on glysophate caused by competitors seeking to drop inventory levels were the main drivers behind group sales falling $890 million to $1.24 billion during the period.

The impact of lower prices for glysophate - the generic name for the Monsanto product Round-Up, which came off-patent a decade ago - was demonstrated most dramatically in a $435 million fall in net working capital to $1.1 billion, of which $364 million was writedowns on glyphosate inventory.

However, the company believed it had retained market share by matching competitors' pricing, although losses on sales and price support for key customers accounted for $29.4 million of the reported loss.

Nufarm had now moved the six months' inventory of glyphosate held at the beginning of the period into the market, and was "now purchasing glysophate acid at market competitive prices and expects to generate more acceptable margins on sales that take place in the balance of the year".

The company expects to demonstrate recovery in the second half.

"While glysophate pricing is expected to remain very competitive, Nufarm will generate acceptable margins in most markets, with the US glysophate segment still transitioning to a more normal level of profitability."

Climatic factors would largely determine sales performance in the second half, with the latest profit projections based on assuming "at least average climatic conditions and subsequent demand in the key selling regions".

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Fisher & Paykel Appliances meets full-year guidance after pickup in second half
TSB Bank posts 21% gain in full-year pretax earnings on loans, deposits
Rangatira lifts annual earnings by 33% on small-goods, packaging assets
Kiwi Income Property Trust posts loss
Infratil returns to profit after year-earlier impairments, lifts revenue
Sealegs, amphibious boatmaker, sails on to first ever profit; shares soar
Nufarm announces terms of A$250 million equity raising to repay debt
Property for Industry posts steady first-quarter earnings, rentals rise
South Canterbury's fluid statements show greater impairments, breaches
Scott Technologies says growing customer demand helped push first half into profit