Nufarm slashes annual forecast

Agricultural chemicals supplier Nufarm has slashed its annual profit guidance, saying it has been unable to meet sales and margin expectations.

"A preliminary review of June trading results indicates that previous assumptions relating to sales and margin expectations for the May to July period have not and cannot be met, and the company is revising its forecast net operating profit for the full year," Nufarm said in a trading update on Wednesday.

"The company now expects to generate a net operating profit (excluding non-operating items) of between $55 million and $65 million.

"Unfavourable climatic conditions, particularly in North America and Europe, have contributed to poor demand for crop protection products.

"This has had a compounding negative impact on the business, with distribution customers able to operate with unusually low inventory levels and additional competition for fewer sales resulting in price and margin pressure in key markets."

In March, Nufarm had forecast a headline result for the full year, including the effect of material items, of between $80 million and $100 million and an operating result of between $110 million and $130 million.

The company said the forecasts assumed at least average climatic conditions and subsequent demand in key selling regions, and a gradual improvement in margins for the weed killer glyphosate through the balance of the financial year.

In April, Nufarm had confirmed its previous guidance for full year net operating profit, saying it had taken account of the most recent trading conditions.

Nufarm had said it expected a recovery in earnings during the second half of the financial year.

Nufarm booked a net loss of about $40 million in the first half of its 2009/10 fiscal year.