HIGHLIGHTS

• Bell Potter rates NUF as Buy with a target price of AUD$3.60, representing approximately 25% upside from the current price of AUD$2.89.
• Underlying NPAT rose 35% on the prior corresponding period to AUD$52M in 1H26, with underlying EBITDA up 18% to AUD$243M and free Cash Flow improving by AUD$193M.
• Net Debt reduced by AUD$135M year-on-year to AUD$1.23B; Leverage target of approximately 2.0x net debt to uEBITDA by end FY26, down from 2.7x in FY25.

Nufarm Limited (ASX:NUF) was trading at AUD$2.89 on 4 June 2026, reflecting a 1.40% gain on the day. Bell Potter maintains a Buy rating on the stock with a target price of AUD$3.60, implying approximately 25% upside from current levels. The stock has faced a challenging period in recent years, buffeted by input cost pressures, adverse seasonal conditions in Australia, and a heavy debt load that has weighed on investor sentiment. However, the 1H26 results released on 27 May 2026 delivered a materially improved Earnings profile and accelerated deleveraging progress that Bell Potter believes the market has not yet fully credited.

First Half FY26 Results: Earnings and Margin Improvement

For the six months ended 31 March 2026, Nufarm reported statutory net profit after tax of AUD$38M, up 28% on the prior corresponding period. Underlying NPAT came in at AUD$52M, representing a 35% increase year-on-year, while underlying EBITDA reached AUD$243M, 18% above the prior period. Free cash flow improved by AUD$193M relative to the prior period, driven by disciplined Working Capital Management and higher operating earnings. These results arrived against a backdrop of adverse foreign exchange movements and dry weather conditions in Australia — factors that weighed on the APAC segment but were more than offset by performance improvements in Europe and North America.

In Europe, underlying EBITDA increased 19% on the prior period (17% in local currency), with management attributing the improvement to a more focused product mix and the ongoing benefits of its performance improvement program. North America delivered 11% underlying EBITDA growth in local currency, with Turf and Ornamental and Canada performing particularly well. APAC was the underperformer, with underlying EBITDA declining 15%, primarily due to dry seasonal conditions in Australia during the first part of the half, though a stronger March partially offset the impact.

Seed Technologies: Emerging Platforms Inflection

The Seed Technologies segment was a notable contributor to the earnings improvement, with underlying EBITDA rising to AUD$58M from AUD$27M in the prior period. Hybrid Seeds delivered 7% growth in underlying EBITDA, supported by favourable Demand for edible oils and renewable fuels, expansion in South American markets, and growth in Australian canola. The more significant development was within Emerging Platforms, which reported an underlying EBITDA loss of AUD$4M — a AUD$26M improvement on the prior period — driven primarily by omega-3 canola.

In March 2026, Nufarm announced an expansion of its strategic Partnership with bp, with the updated agreement extending to 2050. The revised arrangement provides milestone-based funding to support development of carinata seed technology, alongside bp's continued access to purchase oil from the Nufarm Carinata Production System. Management upgraded its Emerging Platforms guidance for FY26, now expecting a AUD$40M improvement in underlying EBITDA, up from previous guidance of AUD$30M.

Deleveraging Progress and Balance Sheet Trajectory

Net debt declined by AUD$135M year-on-year to AUD$1.23B, with the net debt to underlying EBITDA ratio for the twelve months to March 2026 falling to 3.6x — a 20% reduction on the prior period. For full year FY26, Nufarm is targeting leverage of approximately 2.0x net debt to underlying EBITDA, compared with 2.7x at the end of FY25. Free cash flow is expected to be positive in FY26, underpinned by the seasonal unwind in working capital and a Capital Expenditure target below AUD$200M.

Strategy Refresh and Cost Programme

Nufarm's strategy refresh, announced in April 2026, includes an additional AUD$50M cost savings programme to be delivered through asset and portfolio rationalisation, operational efficiencies, and changes to the operating model. The full run-rate of savings is targeted by end of FY27, with cash implementation costs of approximately AUD$15M expected to be predominantly incurred in FY27. The programme reflects a deliberate shift toward capital prioritisation and lower structural costs, which management characterises as creating a simpler operating model with improved working capital outcomes over time.

Conclusion

Nufarm's 1H26 results demonstrate a materially improved earnings trajectory, with profit growth exceeding analyst expectations and the deleveraging pathway toward 2.0x leverage tracking ahead of many investor assumptions. Bell Potter's Buy rating at a AUD$3.60 target captures the view that the market has been too cautious about Nufarm's ability to sustain margin improvement while simultaneously reducing debt. The key variables to monitor heading into the second half are the pace of Active Ingredient cost increases — flagged as a headwind from Middle East instability — and the rate at which Emerging Platforms moves toward consistent profitability. At AUD$2.89, the discount to Bell Potter's target reflects residual uncertainty around these factors, with the August full-year results likely serving as the next meaningful re-rating event.