Nufarm's FY24 Guidance Amendment

Nufarm Limited (ASX: $NUF) has revised its guidance for the fiscal year 2024. The company now anticipates the underlying EBITDA to be in the range of $300 million to $330 million, compared to the previous guidance of $350 million to $390 million. The net leverage is expected to be approximately 2.5 to 2.7 times the underlying EBITDA, in contrast to the earlier projection of 'towards the upper end of a 1.5 to 2.0 times range'. Additionally, the net working capital at the end of FY24 is expected to be approximately $500 million below the 1H24 figure. Omega-3 revenue for FY24 is estimated to be around $50 million, with the planting of Omega-3 canola in 2024 supporting expectations for a significant increase in revenue in FY25.

Executive Commentary

The past financial year has been marked by intense competition and depressed pricing in global markets, leading to a temporary downturn in the industry environment. This has resulted in competitive pressure causing adverse movements in price and product mix, particularly impacting Nufarm's North American crop protection business. Lower than anticipated demand for industrial products from the manufacturing facility at Wyke has also negatively impacted the European crop protection business. The company has tightly controlled inventory and net working capital, with inventory expected to be significantly lower than FY23. Despite lower than expected pricing for its omega-3 oil, Nufarm anticipates strong revenue growth in FY25. The company expects to return to growth with more normal trading conditions in FY25.

Summary of FY24 Guidance Amendment

Nufarm has adjusted its guidance for FY24, citing preliminary unaudited figures to 31 July 2024 and reduced confidence in the industry environment for the remainder of the fiscal year. The company now expects the underlying EBITDA to be in the range of $300 million to $330 million, with net leverage circa 2.5 to 2.7 times the underlying EBITDA. Omega-3 revenue for FY24 is anticipated to be approximately $50 million, and the planting of Omega-3 canola in 2024 is expected to support a significant increase in revenue in FY25. Nufarm attributes the lower guidance to the continuation of a temporary downturn in the industry environment, resulting in competitive pressure and lower demand for industrial products. Despite these challenges, the company remains optimistic about returning to growth in FY25 with more normal trading conditions.