(Adds details about divestment, Nufarm's annual results) Sept...

(Adds details about divestment, Nufarm's annual results)

Sept 30 (Reuters) - Australian crop protection company Nufarm Ltd (NUF) said on Monday it would sell its crop protection and seed treatment assets in South America to Japan's Sumitomo Chemical Co Ltd 4005.T for A$1.19 billion ($804.80 million).

The divestment, including assets in Brazil, Argentina, Chile and Colombia, had been unanimously recommended by the Nufarm board and the firm would buy the $97.5 million preference securities issued to Sumitomo last month at deal completion.

Nufarm and Sumitomo will enter into a two-year supply agreement and transitional services agreement under which Nufarm will provide procurement services and the continued supply of certain products to the South American businesses.

Nufarm said it was confirmed as the preferred commercialisation partner for Sumitomo’s proprietary fungicides Pavecto and Indiflin in Germany, Poland and the UK.

Sumitomo did not immediately respond to Reuters' emailed request for comment.

In a separate statement, Nufarm said its annual underlying net profit after tax dropped about 10% to A$89.1 million, due mainly to the impact of a full year of depreciation and amortisation relating to acquired European portfolios.

The pesticides and crop seeds producer said the performance improvement programme in Australia was forecast to deliver increased earnings before interest, tax, depreciation and amortisation of between A$10 million and A$15 million in 2020.

It said, however, that the tight supply conditions experienced in 2019 for some technical ingredients sourced from China were expected to continue having a negative impact on the cost of goods during 2020.

Severe dry weather has threatened grain production across Australia's east coast, prompting Nufarm to cut its 2019 annual earnings guidance in August, citing the drought as a major cause.

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($1 = 1.4786 Australian dollars)