Nufarm Announces Restructuring in Europe

nufarm_logoNufarm, the Australian off-patent crop protection company that is amid an extensive restructuring, announced it will shutter a European plant and increase capacity at two more facilities in Europe over the next 18 months in a move it says will save it at least $23 million a year.

The company, which earlier this week announced the resignation of Chief Executive Doug Rathbone, said the proposed changes involve the closure of a manufacturing facility in Botlek, Netherlands; and efficiency programs that will reduce costs and increase capacity at manufacturing facilities in Wyke, England and in Gaillon, France.


The move will result in one-time restructuring costs of up to $44 million, the majority of which will be booked in the second half of the current financial year.

Nufarm’s Group Executive Operations, Elbert Prado, said the changes have been identified following a detailed review of the company’s European manufacturing footprint and how it supports both regional growth plans and the requirements of the global business.
“These changes will result in a more efficient manufacturing base in Europe and will improve our competiveness on a global basis by reducing the unit cost of one of our most important herbicides – MCPA – as well as several other products that are produced in Europe and exported to other markets around the world,” Prado said. “The changes will also reduce supply chain complexity, supporting our efforts to improve working capital efficiency across the group.”
The closure of the Botlek involves a potential total headcount reduction of approximately 50 employees. A consultation process is now underway with relevant worker representative groups.
Executive General Manager of Nufarm Europe, Hugo Schweers, said the commitment to increase capacity in Wyke and Gaillon will support strong growth of Nufarm’s regional branded business over coming years.
“We will strengthen our capabilities and capacity in key product areas including insecticides and fungicides as we continue to expand our presence in markets across Europe,” Schweers said.
Chief Operating Officer and Acting CEO Greg Hunt said the planned changes form part of an ongoing performance improvement program that will deliver further cost savings over the coming years. The European initiatives are expected to be fully implemented by July 2016 and are part of a cost reduction and performance improvement program that will deliver an estimated $100 million in savings over the next two to three years, he said. The estimated savings are in addition to the benefits associated with previously announced restructuring activity in Australia.
Nufarm announced a reorganization of its Australian and New Zealand manufacturing footprint last year, with production activity undertaken at an existing six manufacturing sites to be consolidated at three of those sites. The reorganization has continued to progress on plan, Nufarm said. Manufacturing activity at the Welshpool site (Western Australia) ceased prior to Christmas and the plants at Otahuhu (New Zealand) and Lytton (Queensland) are on track to close prior to the end of the 2016 financial year.
Expectations in relation to achieving the annualized cost and head count savings of $16 million are unchanged.
“We are maintaining a relentless focus on delivering higher returns through a combination of working capital improvements and other efficiencies combined with the strong earnings growth we expect to deliver over the medium to long term,” said Hunt.
Nufarm also restated its guidance for first half earnings, with underlying EBIT expected to be ahead of the same period last year.