Highlights

  • Bell Potter maintains a Buy rating on NUF with a price target of AUD 3.60, representing approximately 24% upside to the current share price of AUD 2.90.
  • Underlying NPAT rose 35% year-on-year to AUD 52 million for the half year ended 31 March 2026, while underlying EBITDA climbed 18% to AUD 243 million.
  • Net Debt declined by AUD 135 million on the prior corresponding period to AUD 1.23 billion, with full-year Leverage now targeted at approximately 2.0x net debt to EBITDA.

 

Nufarm Limited (ASX:NUF) shares closed at AUD 2.90 on 28 May 2026, down 0.34% on the day. The stock has long traded at a discount to its broker-assessed Fair Value, and that gap has widened further with Bell Potter maintaining a Buy call at a target of AUD 3.60. For investors monitoring the agricultural chemicals and seed technologies sector on the ASX, the divergence between current market pricing and analyst conviction is a point that warrants careful examination.

The company's share price trajectory reflects a broader de-rating of global crop protection businesses over recent years, as elevated channel inventories and adverse weather cycles dampened Earnings expectations. However, the first-half FY26 result, released on 27 May 2026, suggests those headwinds are progressively normalising, with financial metrics moving in a more favourable direction across multiple measures.

First-Half FY26 Result: What the Numbers Show

For the six months ended 31 March 2026, Nufarm delivered statutory net profit after tax of AUD 38 million, up 28% on the prior corresponding period. The underlying NPAT figure — which strips out one-off items — reached AUD 52 million, a 35% improvement. Underlying EBITDA of AUD 243 million represents an 18% increase, reflecting a combination of better product mix, disciplined cost management, and a meaningful operational recovery in European Crop Protection.

Free Cash Flow improved by AUD 193 million on the prior corresponding period, a development that has direct implications for the company's Balance Sheet trajectory. Net debt fell to AUD 1.23 billion, a reduction of AUD 135 million year-on-year. The net debt to underlying EBITDA ratio for the twelve months to 31 March 2026 came in at 3.6x, down 20% from the prior period — a directional shift that management has flagged as a core strategic priority.

Crop Protection: Regional Divergence in Performance

The Crop Protection division reported underlying EBITDA of AUD 223 million for the half, a 3% increase on the prior corresponding period, or 6% on a constant currency basis. The result was held back by adverse foreign exchange movements and dry weather conditions that weighed on the Australian Business.

Europe was a standout, with underlying EBITDA rising 19% on the prior period (17% in local currency terms). The improvement reflects the execution of a performance improvement program focused on portfolio mix and structural cost reduction. North America contributed an 11% increase in EBITDA in local currency terms, supported by gains in the Turf and Ornamental segment and Canada. Within U.S. Crop Protection, the company maintained a focus on higher-Margin products, though longer regulatory approval timelines delayed some new product Revenue into future periods.

The APAC region was the most challenging, with EBITDA declining 15% on the prior period, driven largely by dry weather in Australia and currency headwinds in Asia. Indonesia provided a partial offset within the broader Asia sub-region, with the local business reporting growth during the period.

Seed Technologies: A Transformational Turnaround

The Seed Technologies division delivered one of the most notable improvements in Nufarm's portfolio during the half. Underlying EBITDA reached AUD 58 million, compared with AUD 27 million in the prior corresponding period — more than doubling year-on-year. The gain was driven by growth in Hybrid Seeds and a material improvement in the Emerging Platforms segment.

Hybrid Seeds reported 7% EBITDA growth, supported by favourable Demand in edible oils and renewable fuels, expansion in South American markets, and growth in Australian canola. The successful launch of new IMI-tolerant canola and sorghum varieties during the period added further commercial depth to the product offering.

Emerging Platforms — which encompasses the omega-3 canola and carinata biofuel programs — reported an underlying EBITDA loss of AUD 4 million for the first half of FY26. While still loss-making, this represents a AUD 26 million improvement on the prior corresponding period. A key development during the half was the expansion of the strategic Partnership with bp, with an updated agreement extending to 2050 and incorporating milestone-based funding to support carinata development. The company also achieved omega-3 deregulation for consumption in Japan and initiated the first regulated trial planting of omega-3 canola in Argentina.

Strategy Refresh and Cost Programme

Alongside the half-year result, Nufarm provided an update on its ongoing strategy refresh, which centres on improved Capital allocation, cost discipline, and earnings quality. In practical terms, this means exiting lower-return markets in Crop Protection, pursuing innovation through external partnerships rather than capital-intensive internal development, and focusing the Seeds business exclusively on Hybrid Seeds and Emerging Platforms.

As announced in April 2026, the strategy refresh includes a AUD 50 million cost savings programme to be delivered through asset rationalisation, operational efficiencies, and operating model changes. Cash implementation costs are estimated at approximately AUD 15 million, to be predominantly incurred in FY27. The full run rate of savings is targeted by the end of FY27.

Full-Year Outlook and Guidance

Nufarm has reaffirmed its FY26 outlook for underlying EBITDA and leverage. The company expects growth in EBITDA for the full year under normal seasonal and market conditions, with positive trading momentum noted in April and May 2026. Management acknowledged the ongoing impact of higher costs for active ingredients, freight, and energy linked to Middle East instability.

Leverage is targeted to reach approximately 2.0x net debt to underlying EBITDA by the end of FY26, down from 2.7x at the close of FY25. Free cash flow is expected to be positive for the full year, supported by a seasonal Working Capital unwind. Capital Expenditure is targeted below AUD 200 million. The guidance for Emerging Platforms has been upgraded, with a AUD 40 million EBITDA improvement now expected versus the previous guidance of AUD 30 million.

Conclusion

Nufarm's 1H26 result demonstrates a business making tangible progress across earnings quality, balance sheet management, and strategic focus. The combination of a 35% rise in underlying NPAT, a AUD 135 million reduction in net debt, a material improvement in Seed Technologies, and an upgraded Emerging Platforms outlook presents a financial picture that contrasts with the restrained share price movement. With Bell Potter maintaining a Buy call at AUD 3.60 and the company reaffirming full-year guidance, Nufarm occupies an interesting position for investors tracking the agricultural sector — one where the financial fundamentals appear to be outpacing market recognition.