Drought in Australia Hits Nufarm Profit
24 January 2014 
Watering sunflowers in Narromine, New South Wales. Photo credit: Flickr user R Walker
Australia’s Nufarm Limited on Friday said its results in the first half will meet the lower end of its previous forecast, as hot, dry weather persisted in Australia in key growing regions during December and January.
It expects to earn near the lower end of between $50 million and $60 million of EBIT, as results were hit by “unusually low sales activity” and lower margins.
First-half results for Australia, which is experiencing its hottest year on record, are expected to be flat with the same period a year ago, and management “continues to assess options” for improving the Australian business.
In contrast to Australia, business in Brazil has been “very positive” in addition to the rest of its South American operations. Its European, North American and Asian businesses are tracking in line with expectations, with the major Northern Hemisphere seasons typically not getting underway until March.
Nufarm noted its net working capital and debt will be higher at Jan. 31 compared with the same period a year ago. It cited “higher sales and resulting receivables in Brazil; the normal first-half inventory build to support what is expected to be higher second-half sales in Northern Hemisphere markets; and a negative translation impact due to the lower Australian dollar.”
The dry summer in Australia also stifled sales of sorghum and sunflower products, but its seed business is expected to continue generating earnings growth for the year.
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