Ann: FORECAST: NFFHA: Market update

• Release Date: 23/01/13 13:41
• Summary: FORECAST: NFFHA: Market update
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NFF
23/01/2013 11:41
FORECAST

REL: 1141 HRS Nufarm Finance (NZ) Limited

FORECAST: NFFHA: Market update

COMPANY ANNOUNCEMENT
23 January, 2013

Market update

- Trading conditions in Australia
- Guidance maintained for half year
- BASF distribution changes in Australia
- US turf business acquisition

Trading conditions in Australia

Trading conditions in Australia in the first half of the financial year have
been more challenging than previously expected and will impact negatively on
the regional result for both the half and full year.

Nufarm's business in the August to January period in Australia is primarily
driven by seasonal conditions - and accompanying weed, pest and disease
pressure - in the summer cropping regions of Northern NSW and Queensland.
These regions have experienced unusually hot and dry conditions for much of
that period, particularly in the months of December and January.

This has impacted in a number of market segments, including relatively high
value segments such as cotton, horticulture and other summer crops.

The Australia/New Zealand regional segment result at the half year is now
expected to be well down on the first half of the previous year.

Autumn rainfall patterns in major cropping regions around Australia will help
determine the extent of planting activity, and demand for crop protection
products, in the second half of the financial year.  It is very likely,
however, that due to the poor first half conditions in Australia, the
regional result at the full year will also be well down on the 2012 full
year.

Half year guidance is maintained

Despite the poor conditions and lower results in Australia, the company
expects to deliver a half year underlying profit result (Earnings before
Interest and Tax: EBIT) that is, as stated at the Annual General Meeting in
early December, at least 15% higher than in the first half of 2012.

While the Australian results will be below expectations at the time of that
guidance, the business in other parts of the world has performed more
strongly than expected, particularly in South America and Europe.  This
underlines the advantage of having a geographically diverse business and
reflects a trend of improving performance in markets such as the Americas and
Europe.

Working capital at the half year will be higher than previously expected,
primarily due to higher inventory levels caused by lower sales in Australia.

The company will continue to assess overall profit expectations for the full
year and will update its current qualitative guidance of an "improved
earnings performance" in due course if appropriate.

BASF distribution arrangements in Australia

BASF advised Nufarm Australia this week that it will terminate its
distribution arrangements in Australia, effective March 1, 2014. Nufarm
Australia and Crop Care (a Nufarm subsidiary) have distributed BASF crop
protection products in Australia since 2004.

Annual revenues generated by BASF products distributed by Nufarm Australia /
Crop Care are less than 10% of Nufarm's total Australian revenues and less
than 3% of Nufarm's global revenues.

BASF has indicated that it will re-enter the Australian market in its own
right when the distribution arrangements cease.

Nufarm is the largest supplier of crop protection products in Australia and -
via its Nufarm and Crop Care businesses - holds the leading position in all
major agricultural segments.  When the BASF distribution arrangements cease
in March 2014, Nufarm will be in a position to supply products involving
active ingredients that cover a majority of the uses currently targeted by
BASF products. Nufarm will be a strong competitor across those chemistries
and will use its significant product development, manufacturing and logistics
presence in Australia to continue to service distribution customers with a
wide range of existing and new products.

On a global basis Nufarm enters into, and cycles out of, distribution
arrangements on a regular basis.  In the past two years new distribution
arrangements have been executed with BASF in markets including Germany,
Argentina and Brazil.  Nufarm has also recently executed distribution
agreements involving either single or multiple products with other companies
including Dow AgroSciences (France); Syngenta (Brazil); Nissan Chemical
(various European markets) and DuPont (Brazil).  These arrangements
complement the expanding distribution relationship Nufarm has with Sumitomo
Chemical, currently involving some 14 markets around the world in which
Sumitomo products are marketed by Nufarm.

US turf business acquisition

Nufarm Limited announced today that it has completed a strategic acquisition
that will strengthen its position in the US turf and ornamental market.

Nufarm Americas has acquired Cleary Chemical Corporation, a marketer of
fungicides, insecticides and plant growth regulators to the turf and
ornamental horticulture industries. The acquisition will result in a
significantly stronger product offering for Nufarm, which is currently the
third-largest plant protection supplier in the US turf and ornamental (T&O)
market.

Nufarm leads the T&O market in selective herbicides and has a substantial
insecticide offering.  Cleary's portfolio of fungicide brands will boost
Nufarm's market presence, especially in the golf and greenhouse/nursery
segments.

Cleary is based in Dayton, New Jersey and has annual sales of approximately
US$11 million. Acquisition consideration totalled approximately US$10
million.

-- end --

Further information: Robert Reis
   [email protected]
   Corporate Affairs
   * (61 3) 9282 1177
End CA:00232253 For:NFF    Type:FORECAST   Time:2013-01-23 11:41:24