Nufarm Interim Results 2019
20 Mar 2019
Strong 1H result in the Americas offsets challenges in Australia and EuropeNufarm Limited today announced underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $120.9 million, down 2% on the prior corresponding period, and a statutory net loss of $13.6 million. Nufarm Managing Director and CEO, Greg Hunt, said the half year EBITDA result reflected strong performance in the North American, Latin American and Seed Technology businesses, which largely offset weaker performance in Australia and Europe.
“We achieved good revenue and earnings growth in North America, Latin America and Seed Technologies and this reflects the potential we’ve set our business up to achieve. We had a difficult half in Australia and Europe with dry weather conditions impacting earnings in both regions, and product availability issues further impacting results in Europe.
“We’re preparing the business to deal with tough conditions in the second half. Farmers on the east coast of Australia are facing continued dry conditions and we’ll be scaling back manufacturing and running down inventories in anticipation of another difficult season. This will impact profit in the second half as we won’t be able to fully recover manufacturing overheads. “In Europe we’re working through supply issues in the product portfolios we acquired last year. We are currently supplied by the vendors of the portfolios and product availability has been impacted by supply disruptions caused by improved Chinese environmental standards. This has resulted in lost sales and increased costs and the impact is expected to worsen as demand for product increases in the second half. Resolving these issues is our top operational priority. We are expediting the transfer of product registrations so we can exit the transitional supply agreements with the vendors and bring product sourcing under Nufarm control in time for the autumn selling season.
“Notwithstanding these transitional issues with supply, our first year of ownership of the new European portfolio has reinforced that these are products customers want. There is strong demand and brand loyalty and we are confident we will deliver full value from the acquisitions in financial year 2020”. Mr Hunt advised that the company is taking a conservative approach to managing the balance sheet as it works through the challenges of the next six months. As a result, the interim dividend has been suspended. “While we acknowledge the short-term challenges, Nufarm is ultimately about growth and we’re very positive about what we can deliver in the medium term. We have a quality product base that is delivering growth and a strong pipeline of new products to be launched in the coming years. The Omega 3 canola platform is progressing toward commercialisation and every milestone brings us closer to realising a step-change in the value of our seeds business”.
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