Nufarm’s 1H25: NPAT Falls to $29.8m as Crop Protection EBIT Jumps 34%

Financial Overview and Market Context

Nufarm Limited’s first half of fiscal 2025 revealed a tale of two divisions. The company reported a statutory net profit after tax (NPAT) of $29.8 million, a significant decline from $49.2 million in the prior corresponding period, which had benefited from a one-off deferred tax asset recognition. Underlying NPAT fell 24% to $38.5 million, while underlying EBIT dropped 15% to $102.7 million, primarily due to challenges in the omega-3 oils segment and increased overhead costs. Reflecting cautious optimism, the company elected not to declare an interim dividend.

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 resurgence was driven by improved stability in active ingredient pricing and favourable seasonal conditions, particularly in Europe and the Asia-Pacific region. Europe’s revenue 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 saw modest revenue growth and a 34% EBIT increase, buoyed by strong performances in Indonesia despite dry conditions in Australia. North America lagged slightly, with revenue down 2% and EBIT down 10%, though volume growth and improved cash flow were positives.

Seed Technologies Under Pressure and Strategic Review

In stark contrast, Seed Technologies experienced a severe downturn, with revenue of $249 million and underlying EBIT plunging 71% to $15.9 million. The decline was attributed to lower licensing revenues, a sharp drop in omega-3 margins due to falling fish oil prices, and reduced canola sales in Australia amid dry conditions. Despite solid performances in canola, sorghum, and sunflower seeds, the segment’s overall profitability was hit hard. In response, Nufarm announced a comprehensive review of its Seed Technologies business, engaging UBS to explore ownership structures that could unlock value and accelerate commercialisation. While no decisions have been made, this review underscores the company’s strategic focus on maximising returns from its diverse seed portfolio.

Innovation and Partnerships

Amid these financial swings, Nufarm continued to advance its innovation pipeline. The company secured registrations for new herbicides across Europe, North America, and Australia, including a promising non-selective herbicide developed in partnership with KingAgroot. Collaborations with Hort Innovation and Kilter on precision application technology, as well as research agreements with bp and Unilever on biomass oil for bioenergy, highlight Nufarm’s commitment to sustainable agricultural solutions. The successful South American carinata crop year and ongoing bioenergy projects further demonstrate the company’s forward-looking approach.

Outlook and Challenges Ahead

Looking forward, Nufarm remains cautiously optimistic but acknowledges several uncertainties. Continued weakness in fish oil prices is expected to depress Seed Technologies’ EBITDA by approximately $20 million in the second half, with omega-3 revenue now forecasted below $100 million for FY25. Crop protection faces potential headwinds from US tariff uncertainties and weather variability, particularly dry conditions in Australia. Management is focused on cost reduction and improving capital efficiency, targeting $50 million in annualised cost savings by the end of FY25 and a significant reduction in inventory days.