Nufarm to close Auckland plant, shift local production to Australia, taking AU$11m charge
Nufarm [ASX: NUF], the agricultural chemicals manufacturer, will close its New Zealand manufacturing plant in Auckland and shift regional production to a plant at Laverton, in the Australian state of Victoria.
Consolidating production will generate annual cost savings of A$3 million and result in the elimination of up to 59 jobs at the Otahuhu, Auckland factory, Nufarm said. It will take an A$11 million charge in the current year for restructuring costs.
The company expects the eventual sale of the Otahuhu site to generate a profit of A$10 million
The Auckland plant closure will bring Nufarm's total restructuring costs in Australia and New Zealand to A$50 million. Overall savings were put at about A$16 million a year.
The company, which makes herbicides and pesticides, announced plans last month to close manufacturing plants at Welshpool in Western Australia and Lytton in Queensland. It would also close six facilities in a reorganisation of its network of regional service centres and warehouses, cut jobs in support and administration, and move to a new management structure.
The transfer of manufacturing from New Zealand to the Laverton factory in Australia "will increase the utilisation and efficiency of those facilities, will result in lower unit costs and will reduce the region's maintenance related capital expenditure and working capital requirements," it said.
Shares of Nufarm last traded at A$3.99 on the ASX and have declined 4.1 percent in the past 12 months.
The shares are rated 'hold' based on the consensus of 32 analysts polled by Reuters, with a median price target of A$4.55.