Dry weather in Australia wilts Nufarm’s earnings
SYDNEY: Agricultural chemical company Nufarm Ltd cut guidance for its fiscal 2018 underlying earnings yesterday after dry weather in Australia reduced demand for crop protection products, sending its shares down as much as 10 per cent.
Unseasonable dry weather across Australia, one of the world’s largest agricultural exporters, has hampered many of the country’s rural companies, although Nufarm is the first to acknowledge production of crops such as wheat could fall drastically.
Nufarm said it had anticipated a rise in demand from farmers for products used after crops emerged, after many growers were forced to sow into dry soils.
But the company said it had been forced to re-evaluate.
“Following feedback from Nufarm teams who had been communicating with growers and channel partners... it was determined that the market had reached a turning point, and it was considered unlikely that a viable crop season would occur in many parts of the country.”
Underlying earnings before interest and tax for the year ending July 31 was now expected at A$255 million to A$270 million (RM771.4 million to RM816.06 million), down from A$302.3 million a year ago, it said.
Nufarm had already downgraded its guidance in May, citing challenging climatic conditions across Australia/New Zealand, Europe and North America.
The firm said its Australian and New Zealand businesses was suffering from “one of the driest autumns since records began more than 100 years ago”.