Brazil Powers Nufarm First-Half Profit

Australian off-patent crop protection company Nufarm said strong sales in Brazil more than made up for struggling business in other regions in the first half of the year.

Revenue for the first half of the year ended Jan. 31, 2014 totaled $1.14 billion, up 21.8% from $934.4 billion in the year ago period.

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Underlying earnings before interest and tax (EBIT) rose almost 20% to $56.7 million with strong growth in Latin America, which more than offset sluggish results in Australia, North America and Europe.

In Brazil, its “strategic focus on higher-value segments of the market” lifted gross margins while it managed expenses. South America accounted for 38% of Nufarm crop protection sales in the first half — more than any other region — compared with 31% in 2013.

Brazil experienced high insect pressure in key crops, offsetting lower-than-normal fungicide demand, Nufarm noted. It increased direct sales and expanded its sales force there. Nufarm also said it saw “excellent sales growth” in Argentina on new product launches and a strong position in the glyphosate resistance segment.

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Nufarm, which announced last week it would shutter two manufacturing facilities and six regional service centers and cut jobs in Australia, said the significant depreciation of the Australian dollar has had a “material impact” on revenue, and if current foreign exchange rates prevail in the second half, the impact will be more marked. Its profit in Australia was hampered by a second consecutive year of extremely hot and dry cropping conditions in Queensland and New South Wales.

Nufarm said U.S. volumes were down in the period due to the severe winter, which ate into demand for higher-margin phenoxy herbicides. Plant recoveries were reduced due to lower glyphosate volumes.

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