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Highlights

  • Nufarm shares fall 24% to AU$3.04 after reporting a 39% drop in statutory net profit for H1 FY2024.

  • Weak performance in Seed Technologies offsets solid Crop Protection results; no interim dividend declared.

  • Company announces full strategic review of Seed Technologies business with UBS assisting.

Shares of Nufarm Ltd (ASX:NUF) crashed 24% to AU$3.04 on Wednesday morning, hitting a 52-week low, after the agricultural chemical and seed company reported a sharp decline in first-half profit and announced a strategic review of its Seed Technologies division.

The company released its financial results for the six months ending 31 March 2024, posting a 3% increase in revenue to AU$1.811 billion and a 5% rise in underlying gross profit to AU$532 million. Despite these top-line gains, profitability declined significantly.

Nufarm reported a 39% fall in statutory net profit after tax to AU$29.8 million, down from AU$49.2 million a year earlier. On an underlying basis, net profit dropped 24% to AU$38.5 million.

The sharp decline was primarily attributed to weakness in the Seed Technologies segment, which saw underlying EBIT plunge 71% to AU$15.9 million on AU$249 million in revenue. Management cited lower licensing revenues, reduced margins in omega-3, and declining canola revenues in Australia as key contributors to the underperformance.

In contrast, the Crop Protection business delivered a stronger performance. The division achieved growth in both underlying EBITDA and EBIT, supported by stabilising active ingredient prices and a more rationalised competitive environment. Volume growth was reported across all geographic regions.

Despite the positive trends in Crop Protection, Nufarm's board opted not to declare an interim dividend.

Adding to the day’s developments, Nufarm announced it has launched a strategic review of its Seed Technologies unit. The company stated that it sees significant opportunities to unlock value and is exploring various ownership structures to support commercialisation efforts. UBS has been appointed to advise on the process, which may include a range of scenarios, although the company noted there is no guarantee of a transaction.

Management acknowledged headwinds going into the second half, including trade policy shifts, market volatility, and weather-related risks. Additionally, the company warned that ongoing weakness in fish oil prices could lead to a AU$20 million year-on-year decline in second-half EBITDA for Seed Technologies. It also no longer expects to achieve its target of AU$100 million in omega-3 revenue for FY2025.