Nufarm slashes Euro operations

Date:02-06-2015

Hot on the heels of Doug Rathbone's departure as Nufarm long-running managing director, the crop protection company has announced major cuts to its European manufacturing activities.

Mr Rathbone had led the company for 15 years. He will receive a termination payment of $1,643,193 plus statutory entitlements. A search is already underway for his replacement, said chairman Don McGauchie, with group executive for commercial operations, Greg Hunt appointed chief operating officer and acting CEO.

Mr McGauchie reiterated the company's "aggressive" plan to rein in costs, announcing a $100 million cost reduction program alongside a separate program to reduce working capital.

In the past two years Nufarm's earnings have been battered by severe dry weather in Australia.

“The changes will result in a more efficient manufacturing base in Europe and will improve our competitiveness on a global basis”

Closure of the manufacturing plant in The Netherlands and efficiency programs in France and the UK are proposed to shave about $23 million a year from Nufarm's business costs.

The rationalisation will involve one-off restructuring costs of about $44m and will take place in the next 18 months.

It follows a similar re-organisation of Nufarm's Australian and New Zealand manufacturing businesses last year, which involves cutting six production site down to three.

Plants at Otahuhu in NZ and Lytton in Brisbane will close before June 2016 and the Welshpool site in Western Australia closed at Christmas, to achieve annual savings of about $16m.

In Europe Nufarm is aiming to slash unit costs of one of its most important herbicide products, MCPA, as well as several other crop chemical products distributed globally.

"The changes will result in a more efficient manufacturing base in Europe and will improve our competitiveness on a global basis as well as reduce supply chain complexity," said operations group executive, Elbert Prado.

The move was in support of efforts to improve the herbicide, pesticide and fungicide company's working capital across its global network.

Capacity at the Wyke plant near Bradford in Yorkshire and Gaillon in France will be increased to compensate for the closure at Botlek in Holland, which will involve the loss of 50 jobs.

Nufarm's European executive general manager, Hugo Schweers said the commitment to increase capacity in Wyke and Gaillon would support strong growth in the company's European business brands in 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 European markets," he said.