Market Shocked as Nufarm Posts $105 Million Loss

Submitted by Jim Thesiger on 3 March, 2010 - 06:57

Nufarm (NUF), a company that manufactures and supplies various types of agricultural chemicals have posted a shocking $105 million worth of drop in its first-half earnings on Tuesday. The company came up with the announcement just before the investors were about to cast their votes on the fractional takeover from Japan based Sumitomo Chemical. The investors who gathered to vote on the issue of selling as much as 20 percent ownership of the company were greeted with the update that Nufarm is expecting to post a $40 million worth of loss for the first half where it recorded $65.7 million profit during the corresponding period of the previous year. Doug Rathbone, the chief executive and largest shareholder of the company in his statement said, earning of the company took a hit due to the low prices of glyphosate herbicide, a reduced demand for chemicals that are used for crop protection and also due to interruptions in production because the climatic situation of North America and Europe.

The stocks of the agricultural chemical company fell by as much as 8 percent or 79c before it recovered a little to close the day at $9.47. The downgrading made the buyout offer of Sumitomo even more lucrative to the investors of Nufarm with the shareholders holding more than 99 percent of stock voting to accept the bid. However, the announcement of first half loss has raised the questions regarding Nufarm’s disclosure of related financial details to the industry and prospective investors.

It is to be mentioned that China based company Sinochem came up with a bid to buy Nufarm for $13 per share during September and later revised its bid price to $12 a share. Later Nufarm went out of the negotiations. According to Nufarm chief executive, the decision of terminating the negotiation with Sinochem was the right one as the directors were convinced that it was not possible to come up with an acceptable agreement with Sinochem and were not interested to commit more resources to the continuing negotiation.

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