Nufarm Faces Strategic Crossroads as Seed Technologies Earnings Plunge

Financial Overview

Nufarm Limited has released its half-year results for the six months ending March 2025, revealing a complex performance across its core divisions. The company reported a statutory net profit after tax (NPAT) of $29.8 million, down significantly from $49.2 million in the prior corresponding period, which had benefited from a one-off tax asset recognition. Underlying NPAT declined 24% to $38.5 million, while underlying earnings before interest and tax (EBIT) fell 15% to $102.7 million, reflecting pressures from weaker omega-3 oils and increased overhead costs. Notably, no interim dividend will be paid.

Crop Protection: A Strong Recovery

The Crop Protection segment was the standout performer, delivering a 34% increase in EBIT compared to the prior year. This improvement was underpinned by greater stability in active ingredient pricing and volume growth, particularly in Europe and the Asia-Pacific region. European revenues surged 17% to $475 million, with EBIT nearly doubling to $43 million, signaling a return to more normal trading conditions after industry-wide destocking. APAC revenues grew modestly by 1% to $462 million, with strong gains in Indonesia offsetting dry conditions in Australia. North America lagged slightly, with revenues down 2% and EBIT falling 10%, though volume growth and improved cash flow were positive signs.

Seed Technologies Under Pressure

In contrast, Seed Technologies faced a challenging half, with revenues of $249 million and a steep 71% drop in underlying EBIT to $15.9 million. The decline was driven primarily by lower licensing revenues, diminished margins in omega-3 oils due to a significant fall in fish oil prices, and reduced canola sales in Australia amid dry conditions. Despite solid performances in hybrid seeds such as canola, sorghum, and sunflower, the segment’s overall profitability was hit hard. The company continues to advance bioenergy initiatives, including expanded carinata production in South America and research collaborations with bp, Unilever, and CSIRO on innovative biomass oil technologies.

Strategic Review of Seed Technologies

In response to these challenges, Nufarm has launched a comprehensive review of its Seed Technologies business. This portfolio includes a profitable hybrid seeds platform, two large-scale technologies in commercial ramp-up, and a pipeline of emerging innovations. The review aims to explore ownership structures and commercialisation strategies to unlock greater value and accelerate growth. UBS has been engaged to assist with this process, though no decisions have been made and no outcomes are guaranteed. The market can expect updates as the review progresses.

Outlook and Market Conditions

Looking ahead, Nufarm remains cautiously optimistic but acknowledges several uncertainties. Continued weakness in fish oil prices is expected to reduce Seed Technologies’ second-half EBITDA by approximately $20 million compared to last year, and the company no longer anticipates reaching $100 million in omega-3 revenue for FY25. Additional risks include the ongoing US tariff situation, which clouds supply and pricing dynamics, and weather conditions, particularly dry spells in Australia that could dampen crop protection sales. Management is focused on cost reduction and improving capital efficiency, targeting $50 million in annualised cost savings by the end of FY25 and a 25-day reduction in inventory levels.

Overall, Nufarm’s first half reflects a business navigating a mixed agricultural landscape, with promising signs in crop protection offset by headwinds in seed technologies and omega-3 markets. The strategic review underway could mark a pivotal moment for the company’s future direction.