Nufarm expects a fall in half year profit
Nufarm shares have fallen after the agricultural chemicals supplier warned its half-year earnings would suffer from weak trade in November and the planned shutdown of its Victorian facility.
Chief executive Greg Hunt told the company's annual general meeting that Nufarm expected half-year earnings of $70 million to $80 million.
That compares to $85 million in underlying earnings before interest and tax in the prior corresponding period.
Nufarm's November sales were hit by a delay in the farming season across parts of Latin America, and a 10 per cent fall in earnings from the Brazillian market, year-on-year, Mr Hunt said.
Despite optimism for local summer cropping thanks to recent rains on the east coast, Nufarm expects its Australian earnings will be lower due to scheduled shutdowns at its plant in Laverton, Victoria.
It was a good start to the year in north America, with solid early order sales in the turf and ornamentals segments, he said.
Chairman Donald McGauchie said industry conditions remained tight and supply constraints on raw materials coming out of China would put pressure on prices, but continued earnings growth was expected over the 2018 and 2019 financial years.
That was due to the company capitalising on several opportunities that had emerged out of industry consolidation in 2017, he said.
Nufarm's acquisition of a new portfolio of European crop protection formulations in October is expected to add mid-to-high single digit earnings per share (pre-amortisation) in the first full year of ownership.
"For the full year, we still anticipate the combination of revenue growth and cost savings benefits to result in earnings growth for the group - prior to any contribution from the European acquisitions," Mr Hunt said.
The transactions were currently with the European Commission and guidance on their contribution would be provided in the first quarter of calendar 2018, he said.
Nufarm shares dropped nine cents, or one per cent, to $8.69.
Get the latest news from thewest.com.au in your inbox.
Sign up for our emails