Nufarm group revenues increased by 12% to $3.11 billion (2016: $2.79 billion), which is a strong outcome given the overall industry saw little to no growth during the period. The group generated an underlying gross profit margin of 29.4%, in line with the 29.6% margin for the previous year.   

Total crop protection sales increased by 11% to $2.94 billion and generated a 6% increase in EBIT to $321.6 million. The crop protection underlying gross profit margin was 28.4% of sales, in line with the previous year of 28.5%.   

Seed technology sales in the period were up by 17% to $168.6 million and generated an EBIT of $36.4 million, which was a significant improvement on the $28.7 million recorded in this segment in the 2016 year.  The seed technologies underlying gross profit margin was 47.4% of sales, above the previous year of 45.0%.  

Crop Protection  

Nufarm's crop protection business generated $2.94 billion in revenues, which was up 11% on the previous year sales of $2.65 billion. These sales generated an average underlying gross profit margin of 28.4%, in line with the 28.5% average gross profit margin recorded in the 2016 year.  
Herbicide sales were up 10% to $1.95 billion. Glyphosate sales were well up on last year, due to a higher average technical price, and improved volumes in Australia/New Zealand and North America, however, margins were slightly down due to competitive market conditions in Australia, North America and Latin America. Phenoxy herbicide revenues were lower than the prior year, but margins were up, driven by an improved cost position.  Other herbicides are ahead of last year, with Flumioxazin and Picloram being the main drivers.   

Insecticide sales were up 18% to $342 million, with margin percentage in line with the prior year.  The increased sales were driven mainly by Brazil, with growth from new products, extensions into new crops and strong sales of a Sumitomo-sourced product that controls white fly infestation in soybeans.      

Fungicide sales were up by 8% to $335 million, with margins ahead of the prior year.  The fungicide portfolio performed well in the period, with most regions contributing to the growth.  Main contributors to the result include Mancozeb, Fludioxinil and the copper-based products.      
The Croplands equipment business, based in Australia, generated higher sales and there was also an increase in sales of plant growth regulators.  These revenues are captured in ‘other products’ category sales, which were up 5% to $310 million.    

The company continued to strengthen its strategic relationship with Sumitomo Chemical Company and this was reflected in higher sales of Sumitomo products across Nufarm’s distribution platform. Nufarm sales of Sumitomo products grew 38% to $229 million.  The higher sales were mainly in the US, Canada and Brazil.  Portfolio collaboration opportunities continue to be explored and developed.  
Seed Technologies 

The company’s seed technologies segment includes sales of seeds, managed under the Nuseed business, and seed treatment chemistry. Revenues in this segment were $168.6 million, 17% ahead of the prior year sales of $143.6 million. The segment generated a profit of $36.4 million at the underlying EBIT level, well up on the $28.7 million recorded in the prior year.    
Australian canola, European sunflowers, Latin American sorghum and European seed treatment sales were all strong contributors to the sales growth. Australian canola volumes increased more than 50%, with favourable early seasonal conditions and market share gains.  Australian earnings also benefitted from higher collections of canola end-point royalties from the strong 2016 farmer saved seed harvest.  The growth in European sunflowers and Latin America sorghum relates primarily to market share growth from new pipeline launches. Sales of seed treatment chemistry were in line with the prior year, with a stronger sales performance in both Brazil and the US and slightly lower sales in Europe and Canada.  
The regulatory submissions for the company's omega-3 canola program were filed in Australia, the United States and Canada earlier this year. The submissions are progressing well, and the company is on track to initiate first commercial production in the 2018/19 financial year.  The first large-scale omega-3 canola crop is being harvested in the United States this month, representing an important milestone in the pre-commercialisation phase of the industry leading program.  Some 3,000 acres of the proprietary omega-3 canola are being grown in Washington State in compliance with the USDA notification process.   

This unique omega-3 canola produces long-chain omega-3, similar to those found in fish oil, using a sustainable land-based source.  It has been developed through collaboration between Nufarm’s wholly owned subsidiary, Nuseed; the Commonwealth Scientific and Industrial Research Organisation (CSIRO); and the Grains Research and Development Corporation (GRDC).     Pre-commercialisation plans are progressing on schedule, with important fish feed and nutrition studies underway or planned, and strong interest from the customer base.  Nuseed will utilise a closed loop production system for the oil, in which growers will be contracted to grow the crop and crushers will be contracted to extract the oil, with Nuseed then supplying the oil to markets including aquaculture feed companies.  The ability to coordinate the value chain beyond the seed will allow the company to secure maximum value from the omega-3 program, while ensuring quality and providing the transparency expected by customers.  
Nuseed and its partners, CSIRO and GRDC, have jointly secured a strong intellectual property (IP) position, which facilitates a clear pathway to commercialisation.  Several companies aspire to produce alternative sources of long chain omega-3, including BASF.  BASF has chosen to challenge several of our patents without success.  Nuseed continues to assess actions against BASF patents in various jurisdictions.  This activity is anticipated to continue as a normal course of IP estate management in both companies. 

Sales by region

Australia / New Zealand 
Australia/New Zealand sales increased 18% on the prior year, as the business executed a strategy to regain volume and share.  There was a resulting impact on gross margins, particularly in Australia, where the business took the decision to be price-competitive in certain targeted market segments.   
The segment generated sales of $654.2 million, up on the previous years $554.0 million.   Underlying EBIT was $51.6 million compared to $47.0 million in the prior year.  

Climatic conditions in Australia were below average.  The summer crop and fallow season in northern NSW and southern Queensland was very dry.  The winter season also started poorly in the key cropping areas of Western Australia and Northern NSW/Southern Queensland.  The month of June was the driest on record in many parts of the country.  While the winter crop plantings are estimated to be in line with the area planted in 2016, this year’s harvest is forecast to be down by a third.  The dry conditions reduced product demand, which led to pricing pressure across the market.   

In May, Nufarm announced that the company’s marketing arms and brands in Australia, previously marketed under Nufarm and Crop Care brands, would be merged as of August 1, 2017.  The integration has resulted in a single, focused sales organisation that is delivering business efficiencies and an improved service to Australian customers.    

The previously announced closure of three manufacturing facilities in Australia and New Zealand is now complete.  Two sites have been sold, with the third site sold after 31 July.  The manufacturing restructure results in lower fixed costs; better plant utilisation; and improved efficiencies.  This ensures the company can be more price competitive for customers, and furthermore, the higher sales volumes have helped secure more of the benefits of the restructuring program.   


Asian crop protection sales were $165.6 million compared to $148.6 million in the prior year, an increase of 11%.  Underlying EBIT improved to $24.4 million, up 7% on the $22.8 million generated in the prior year.  

Indonesian sales were up on last year, driven by good weather and an early start to the planting season.  In the prior year, Indonesian sales were impacted by an El Nino weather event.  There was continued sales growth into Japan and China.  The higher sales, combined with an increased focus on higher margin products, led to the improved EBIT result over the prior period.  
North America  

North American crop protection sales grew by 16% to $761.1 million.  Underlying EBIT was up strongly to $70.3 million, compared to $59.3 million in the prior year.    

In the US broadacre segment, sales volumes grew 17% with the company’s focused channel strategy delivering results, aided by a strong fall burndown market and increased cotton plantings.  The turf and ornamental business grew sales 5%, mainly off the back of new mixture products.  In Canada, demand from higher canola, soybeans and pulse plantings, along with well executed marketing plans, drove a 28% sales increase on the prior year.   

The implementation of – a customer relationship management tool – was completed in February, and is resulting in better business processes, and better communication both within the organisation and with distribution customers.  

The Calgary plant in Canada was closed in June 2016, with production moving to the Chicago Heights facility.  The full benefit of these manufacturing efficiencies was realised in the 2017 financial year.    

Latin America 

Latin American crop protection sales were up 11% on the previous year ($821.8 million v $740.7 million).  Underlying EBIT at $89.4 million was down 11% on the prior year’s $100.4 million.  The Brazilian business grew sales by 20% and earnings by 5%.  In contrast, the Argentina business suffered from variable weather and severe pricing pressure, with sales down 26% and margins down 24%.   
Weather conditions in Brazil were positive, resulting in record grain production.  Nufarm’s local currency sales were up by 10%, reflecting a gain in market share on the prior year.  The total value of the Brazil crop protection market is estimated to have been flat in calendar year 2016 (as measured in US dollars) compared to calendar year 2015.   
In contrast to last year, the average Brazilian Real exchange rate for the period was nearly 10% stronger against the Australian dollar, and the Brazilian Real was less volatile compared to the 2016 financial year.  This resulted in a greater proportion of sales being invoiced in US dollars, and allowed the business to better manage the foreign currency exposures, resulting in a reduced currency loss, consistent with the guidance provided at the 2016 full year results. 
The strong Brazilian Real did, however, result in farmers delaying their purchases of crop protection inputs in anticipation of price reductions, and this led to some pricing pressure in the market.  More sales and technical support for new product launches and increased expertise in the treasury function resulted in a higher cost base in Brazil.    

A feature of the Brazilian market during the period was the continued challenges faced by the grower base in obtaining credit.  Whilst the business managed credit well, and growers are experiencing record harvests, the company remains vigilant on customer receivables.  The business continues to enhance the portfolio with several new products launched during the year.  Channel inventory for Nufarm products is at normal levels. The Argentina business suffered from a delayed season, due to excessive rainfall, as well as a change in the import licensing system, which allowed greater access to the market for imported products. This caused growers to delay purchases, with many putting their business out to tender, resulting in severe pricing pressure in the market.  The Argentina result was also impacted by the exchange rate, with the Argentina peso 30% weaker against the Australian dollar across the year.  A local inflation rate above 30% impacted the company’s cost base.  Argentina earnings were consequently down $17 million compared to the prior period, but still managed to generate a small profit for the year.    


European sales were below the prior period by 2% (2017: $539.8 million v 2016: $550.4 million), but grew 7% on a constant currency basis.  Underlying EBIT improved strongly to $85.8 million, ahead of the $73.0 million posted in the 2016 year.  Seasonal conditions were mixed, with a late start to the season in western and central Europe, and dry conditions in southern Europe. 
Nufarm's branded products accounted for all the constant-currency sales growth.  The business continues to focus on high value and differentiated products, together with new product launches and pricing discipline which has contributed to the improved profitability of the business.    
The previously announced restructuring of the European manufacturing base is completed.  Manufacturing efficiency programs at the Linz (Austria) and Gaillon (France) production facilities are nearing completion.  A more efficient European manufacturing base is strengthening Nufarm’s competitive position and lowering the working capital requirements of the business.  The new European ERP system and implementation of a shared services model will further strengthen the European business over coming periods.    


The combination of revenue growth, margin expansion and additional cost savings benefits is expected to result in earnings growth in 2018.  This is despite an expectation that soft commodity prices will remain low.  

The company’s performance in Australia is expected to have a better balance between sales of high margin and commodity products that should see sales and production volumes improve.  As well, the merger of the Nufarm and Crop Care marketing arms will position the business to deliver a better experience for our customers.  Spring and summer rains in northern NSW and Queensland are needed to generate demand for crop protection products in the summer cropping period.   

The company is well positioned to generate growth in the US, where our business will benefit from new product introductions and strong support from channel partners.    

In Brazil, the area planted to crops and the volume of crop protection inputs is expected to rise.  Careful management of inventories; positive exposure to stronger market segments; and new product introductions should result in Nufarm’s business being well placed to achieve growth in the 2018 financial year.  A modest earnings recovery is expected for Argentina.  

New product introductions and increased investment in marketing and sales staff in our key European markets should underpin what is expected to be another improved performance in this region.   

A pipeline of continuous new seed product launches and new seed treatment products, combined with the Beyond Yield strategy, should deliver steady earnings growth over the next twelve months for the seed technologies segment.  

Net interest expense is expected to be moderately lower in 2018.  Net foreign exchange impacts will continue to include anticipated hedging costs of approximately $20 million for Brazil and Argentina.  

Management will stay focused on strengthening the balance sheet, with continued attention given to working capital management.  The working capital objective will be to retain the efficiencies achieved in recent years, and upon the completion of the supply chain investment, drive the next step change reduction in average net working capital.  The benefits from this project will start to flow in the 2018 financial year.  
By building on what has been achieved over the last two years with the performance improvement program, and maintaining our strategic focus, Nufarm is positioned to capitalize on the many opportunities evolving in the global agricultural space.  The company continues to remain alert to potential acquisitions that might result from the current round of industry consolidation, but will be disciplined in terms of ensuring any such opportunities represent compelling value and are strategically sound.    

In summary, and assuming average seasonal conditions, the business is expected to generate an improved EBIT on the prior year, driven by the combination of growing revenues, margin expansion and cost saving benefits.