Melbourne-based Nufarm grew out of the old New Zealand Farmers Fertiliser (Fernz) and has traditionally been this country’s largest herbicide distributor though NZ is now a very small part of the worldwide business.
It improved NZ earnings for the year but they aren’t disclosed, being included in the overall Australasia region figures.
Nufarm reported a bottom-line loss of A$15.58m in the year ended July 31 after an A$98.4m after-tax profit was undone by one-off, after-tax charges of A$114m. The biggest part of that was an A$70m write-down on the Australian business, hit by Australia’s worst autumn drought in 100 years and continuing very dry conditions through the winter in east coast regions.
Outside of Australasia, the North America business performed well with Europe, Asia and Latin America ahead on revenues and fairly steady on earnings with the prior year.
Its A$963m gross profit came from Europe 28%, Latin America 26%, North America 21%, Australasia 12% and Asia 4%.
A seed technology business provides the remaining 9% of gross earnings.
The European season, including new acquisitions, was later than usual, increasing working capital needs late in the year and leading to an operating cash outflow of A$88m for the year.
Nufarm’s flagship herbicide product has been the crop-protection agri-chemical glyphosate, sold as Roundup. Herbicides made up 57% of gross earnings. Glyphosate on its own was at 12%.
Glyphosate has taken on more controversy since a United States court case over its alleged cancer-risk, in which the court ruled against the product’s developer, Monsanto.
Nufarm defended glyphosate strongly in its earnings presentation, saying it views the likelihood of it being removed from grower use as low.
All major regulatory authorities have concluded glyphosate is unlikely to be carcinogenic when used in accordance with label instructions and that is supported by more than 800 scientific studies and reviews over many decades.
“A federally funded US agriculture study, completed in 2017, which followed more than 89,000 people, including farm works and their families, for more than 20 years, concluded that no association was apparent between glyphosate and any solid tumours or lymphoid malignancies overall.”
Environmental and food safety regulators in the US, Europe and Australia employed rigorous processes and did years of analysis and reviews before products like glyphosate were approved for use, Nufarm said.
It has been safely and effectively used by growers for more than 40 years.
Nufarm’s total revenues for the year were A$3.3 billion across the herbicide, insecticide and fungicide range and the new Seed Tech business, which is performing well and is due to commercialise an Omega-3 canola product in the next couple of years, subject to final regulatory approvals.
Australian and NZ revenues in the 2018 year were A$590m, down from A$654m a year earlier. NZ can typically provide 10% to 15% of the sales.
While Australia was very difficult, the NZ business performed well, benefiting from growth in the pasture and horticulture markets, the company said.
At balance date Nufarm had total assets of A$5.5 billion and total liabilities of $3.08b, including borrowings of $A1.97b. Net finance costs were A$118m, out of the total operating earnings before interest and tax figure of $265m.
The company is in the process of raising A$303m from the rights issue, with shareholders able to buy three new shares for every 19 shares already owned, at a price of A$5.85. An institutional offer of new shares has also been made.
Despite being asked for more cash, shareholders, including a solid NZ retail investor base, will get a final dividend of 11c a share.
