Announcement
GENERAL: NFF: Update on first half earnings
11:18am
NFF
17/01/2020 11:18
GENERAL
PRICE SENSITIVE
REL: 1118 HRS Nufarm Finance (NZ) Limited
GENERAL: NFF: Update on first half earnings
On 25 November 2019 Nufarm advised that earnings for the half year ending 31
January 2020 were expected to be significantly lower than the prior
comparative period.
With an additional two months of trading performance now available, Nufarm is
able to provide an estimate of earnings before interest, tax, depreciation
and amortisation, which is expected to be in the range of $55 million to $65
million for the first half of FY20.
While Nufarm will report actual first half financial results for FY20 on 25
March 2020, the following observations of market conditions and trading
performance for the year to date have informed the estimate of first half
earnings.
South America
Sales growth has continued in South America, particularly in Brazil, however
margins have continued to be impacted by strong competition. Some additional
costs have been incurred in preparation for the launch of new products in the
coming years and earnings before interest, tax, depreciation and amortisation
are expected to be slightly lower than the prior comparative period.
North America
In the market update on 25 November 2019, we advised industry-wide weak
demand for crop protection products in North America had impacted earnings in
the first quarter by approximately $20 million and this has not been
mitigated in the second quarter. While there are positive signs for the
spring planting season markets remain competitive and we are observing a
shift in customer purchasing intentions to in-season rather than in advance
of the planting season. Our expectation is for earnings from the North
American business to be more heavily weighted toward the second half of the
year compared to the prior comparative period.
Europe
Sales in Europe have increased however higher raw material costs and strong
market competition during the Autumn sales period impacted margins. Increased
sales, marketing and logistics costs have also been incurred with increased
resources put in place over the past year to service the needs of the larger
portfolio. Europe's cost base will be more fully leveraged in the second half
of the year when the majority of sales are generated, but the segment is
expected to record a loss before interest, tax, depreciation and amortisation
in the first half. This reporting period will include $9 million of
additional rebates as advised in the market update on 25 November 2019.
Australia and New Zealand
In Australia we have experienced a significant reduction in sales due to a
continuation of extreme climatic conditions. The impact of this has been
partially offset by savings from the performance improvement program
commenced last year. While there is some potential for increased sales in the
remainder of the first half of the financial year due to recent and forecast
rainfall, it is expected the Australia and New Zealand segment will record a
loss before interest, tax, depreciation and amortisation for the first half.
Asia
Sales and earnings before interest, tax, depreciation and amortisation in
Asia are expected to be lower than the prior comparative period due to
difficult climatic conditions and high inventory levels at the customer level
constraining demand.
Seed Technologies
Earnings in the Seed Technologies segment are expected to be slightly lower
than the prior comparative period primarily due to a ramp up in omega-3
commercialisation activities and additional costs to support the new carinata
business.
Sale of South American businesses
The necessary filings for Brazilian competition regulatory approval were made
in late December 2019 and these are currently being considered by the
regulator. Completion of the transaction is expected to occur in the second
half of FY20, subject to regulatory approval.
-- End --
Investor and media contact:
Nerida Mossop
nerida.mossop@nufarm.com
+61 437 361 433
End CA:00347243 For:NFF Type:GENERAL Time:2020-01-17 11:18:25
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