Nufarm books massive loss
Seeds and crop protection company Nufarm has booked a massive full-year net loss after demand in Australia fell as drought reduced summer crop planting and poor seasonal conditions hit Europe.
The company's eye-watering $456 million loss compares with a $38.3 million profit for 2018-19.
Nufarm chief executive Greg Hunt said earnings performance in 2019-20 had been disappointing.
"The agricultural markets in which we operate across the globe have endured mixed seasonal conditions, industry-related supply issues and of course the tragedy and disruption of COVID-19," Mr Hunt said.
"While good momentum was generated in most regions in the second half of the year, weaker earnings from the North American business in the first half and a decline in European and seed technologies earnings resulted in underlying EBITDA from continuing operations declining by 21 per cent."
He said earnings rebounded in Australia, New Zealand, North America and Asia in the second half, and the primary focus was improving the performance of the European business.
"We have a comprehensive program under way in Europe to grow revenues, reduce costs and lift margins," Mr Hunt said.
"We expect this program, combined with an anticipated easing in raw material costs and improved weather conditions, would be the major driver of improved profitability in the European business in FY21 and beyond."
Material items of $389 million after tax included costs related to successful legal action instigated in the US late last year to enforce Nufarm's rights to its omega-3 canola patent, which were infringed in Virginia.
The genetically modified patent is the world's first plant-based source of long-chain omega-3 fatty acids and is initially being commercialised as feed for the aquaculture industry.
Mr Hunt said plans to expand production and sales of omega-3 canola were advancing, with the first commercial sales and forward orders to a major global salmon producer secured this month.
He said the deal marked "the beginning of a new phase in the delivery of shareholder value", while Canadian regulatory approvals received in July were an important element for the planned future expansion.
Moody's Investors Service analyst Maadhavi Barber said the result was credit negative but viewed Nufarm's debt reduction initiatives as favourable given its earnings were vulnerable to weather variability, product commoditisation and commodity price fluctuations.
The company also maintained good liquidity, she said.
The result comes nine days after Nufarm announced chief financial officer Paul Binfield would leave the company at the end of the year to pursue the next step in his career.
The company's shares were more than 8 per cent higher in intraday trade.
Originally published as Nufarm books massive loss