Nufarm chair says 'the worst is behind us'

NUFARM chairman Donald McGauchie says the agricultural chemicals supplier has reached a turning point in its troubled history after being hit by the loss of key distribution agreements, a worldwide collapse in the prices of glyphosate, a herbicide, and poor weather since he took over the chairmanship three years ago.

Analysts slashed the group's earnings estimates in late March and its shares fell to an 18-month low when Nufarm downgraded its full-year profit outlook, blaming a hot, dry summer for hurting first-half earnings which could not be recouped in the second half.

The downgrade came only weeks after the group lost the exclusive rights to distribute Roundup, the weedkiller made by US giant Monsanto, in the local market.

It was Nufarm's second contract loss this year following a decision by global chemicals giant BASF to distribute its range of crop protection products in Australia directly.

But Mr McGauchie said the worst was now over for the company. "Oh, yes, I am absolutely certain of that, absolutely certain of it," Mr McGauchie told The Australian.

Nufarm counts Japans Sumitomo Chemical Corp as a 23 per cent shareholder. China's biggest chemical supplier, Sinochem, made an unsuccessful $13-a-share bid for Nufarm four years ago.

Nufarm shares have been on the rebound since mid-April, rising from below the $4 mark to more than $4.75 earlier this month. But they are still well down on the levels well above $6 reached earlier this year.

Nufarm controls about 50 percent of the glyphosate market in Australia. The company was rocked at the time Mr McGauchie took the chairmanship in 2010 by a collapse in glyphosate prices, which caused its profits to tumble and its share price to slump.

"That glyphosate hit was a tsunami by any measure and it knocked the hell out of every company in the industry. Even Monsanto. We weren't alone in being hit by that. We have learnt from that. We have done quite a few things since," Mr McGauchie said.

Nufarm managing director Doug Rathbone has previously argued that the loss of the Roundup contract, which equated to less than 5 per cent of the group's revenue worldwide, could be offset by sales of patented and trademark weedkilling products Nufarm had developed in-house.

The group is also aiming to double earnings in its seed business to $60 million over the next three to four years as it looks to diversify into higher margin and higher growth markets.