Nufarm cuts profit guidance by 15%
A month after raising $A300 million in a share placement, chemicals maker Nufarm says it will miss its previous full year earnings guidance by 15%.
Investors responded by hammering the share price, sending it down 11% to $10.73.
The New Zealand-born company, now listed on the ASX with a bevy of kiwi shareholders, says sagging demand for glyphosate and increased competition will effect earnings.
Glyphosate is one of the world's most widely used herbicides.
Managing director Doug Rathbone says that while not possible to accurately estimate the impact on year end operating profit, on current projections the company expects to miss earnings guidance of approximately $A220 million by 15%.
“We have been saying for some time that the buying patterns this year were much later than normal, but trading over recent weeks has revealed that volumes are also going to be down and will not recover in the current season,” Mr Rathbone said.
The company says glyphosate sales in May and through the first half of June are tracking significantly below previous forecasts, with the most dramatic impact being felt in the US.
He said the remainder of Nufarm’s business was performing to expectations, with strong sales being generated in relation to other products.
“With agricultural markets expected to be strong in 2010, we’ll see a return to more normal purchasing and demand patterns.”
The profit warning comes amid speculation China National Chemical Corp could be interested in revisiting takeover talks that fell apart in late 2007.
Last month Nufarm raised about $300 million through an institutional share placement at $A11.25 per share.
After the placement, Nufarm's forecast 2009 full year net debt was expected to be about $A550 million.
Nufarm shares last traded at $A12.10