Nufarm Ltd (ASX: NUF) shares are having a day to forget on Wednesday.
In morning trade, the ASX 200 stock is down 24% to a 52-week low of $3.04.
This follows the release of the crop protection company's half year results.
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ASX 200 stock crashes on results day
For the six months ended 31 March, Nufarm reported a 3% lift in revenue to $1,811 million and a 5% increase in underlying gross profit to $532 million.
However, things were nowhere near as positive for the company's profit after tax. Management notes that its statutory net profit after tax was $29.8 million for the half. This is down 39% from the $49.2 million it recorded in the prior corresponding period.
On an underlying basis, the ASX 200 stock's net profit after tax was down 24% to $38.5 million.
The main drag on its performance was the Seed Technologies business. It reported revenue of $249 million and underlying EBIT of $15.9 million. The latter is a 71% decline on the prior corresponding period. This reflects lower licensing revenues, lower margins in omega-3, and lower canola revenues in Australia.
This offset a solid performance from its Crop Protection business. It reported strong growth in underlying EBITDA and underlying EBIT compared with the prior corresponding period. Management notes that following a challenging period, the industry moved to more normal levels of competition. All regions grew volumes and benefited from greater stability in active ingredient pricing which improved margins.
Nevertheless, this wasn't enough to give the ASX 200 stock's board the confidence to reinstate its dividend. There will be no interim dividend this year.
Seed Technologies review
As well as its results, Nufarm has announced a review of Seed Technologies. It stated:
We believe that there are potentially significant opportunities for enhancing value across these multiple seeds and traits platforms and that now is the right time to explore ownership structures to support and accelerate the next stage of commercialisation.
As a result, the company is undertaking a review encompassing whole of business and platform by platform approaches to maximising value. UBS has been engaged to assist with this review. At this stage no options are being ruled in or out. There is no certainty that this process will lead to a transaction. We will report to the market as appropriate.
Outlook
Management believes that the ASX 200 stock is well positioned, but remains conscious that market, trade policy, and weather conditions could impact the second half.
It also notes that if the current weakness in fish oil pricing continues to hold, it expects EBITDA from Seed Technologies for the second half to be $20 million below the prior year. In addition, it no longer expect to achieve $100 million of omega-3 revenue in FY 2025.
