CROP protection and seed company Nufarm has reported a statutory net loss after tax of $6 million for the financial year ending September 30.

The result is a significant drop from the previous financial year, which returned a profit of $111.1M.

The company announced underlying earnings before interest, taxes, depreciation and amortisation of $313M, a 29-percent drop on FY23’s result of $439.4M.

Nufarm managing director and chief executive officer Greg Hunt said the outcome was still a “solid result” considering the “challenging market” conditions.

“Underlying EBITDA was at the midpoint of our revised guidance range,” Mr Hunt said in a statement published to the ASX.

“We reduced net working capital by 30pc and net debt by 25pc and, despite cyclically low earnings, we delivered net leverage of 2.0 times underlying EBITDA.

“This is a good performance given industry conditions, and demonstrates our ability to navigate a difficult environment.”

In financial documents published to the ASX, Nufarm has pointed to a drop in sale prices for products as a key factor in the reduction in profits.

“Lower profitability than prior year was due mainly to competitive market conditions which negatively impacted selling prices and margin in many parts of our business,” the report said.

Nufarm’s largest business segment, crop protection, delivered underlying EBITDA of $294M, down from the FY23 result of $415M.

The company said this was due to “competitive pressures on selling prices” in several regions, with the North American segment experiencing the strongest pressure on margins.

The seed technologies section recorded underlying EBITDA of $83M, a 25pc reduction on FY23, which Nufarm attributes to lower licencing revenue compared to previous years.

“We had a solid year in canola hybrid seed sales, while revenue from sorghum and sunflower seed sales were both lower year on year.

“We strengthened our canola position in Australia with improved product mix, and are leveraging these genetics to grow our position in South America.”

Nufarm also reported progress regarding novel crop varieties such as carinata and camelina during FY24.

Despite the carinata expansion in Argentina being impacted by unseasonal wet conditions, further growth in Uruguay, the launch in Brazil and the “validated performance” of pre-commercial trials in Australia and the EU were positive steps for the crop.

In July, the company entered a licence agreement with Yield10’s omega-3 camelina.

This initiative creates a potential opportunity to produce omega-3 in winter camelina grown as a cover crop.

“While still in the development phase, the technology and pipeline are expected to be highly synergistic to our existing R&D and established value chain to end use markets and key customers.”

Biofuel potential

Nufarm said it believes active-ingredient prices for crop-protection products will stabilise into FY25.

“As a result, we do not expect to see the same deflationary impact from falling active-ingredient prices that we saw in FY24.”

The company said it was targeting growth in canola, sorghum and seed sales for the coming year “driven by supportive crop prices and multiple long-term demand drivers in food, feed and energy”.

It said the seeds platform was a “high priority” for capital expenditure in FY25.

Alongside these crops, Nufarm said the biofuel sector provided a positive opportunity for growth for the company.

The company said demand-side measures to support use of these fuels would create certainty and price stability for future growth and investment.

“We believe that the growth of mandates creates strong long term fundamentals for biofuels.

“The industry is experiencing volatility in pricing and GHG premiums ahead of markets transitioning to mandated use.”

Source: Nufarm, ASX