Agricultural chemical manufacturer Nufarm has been doubly hit by Russia’s invasion of Ukraine with doubts over the future of its business in both countries.
The company told investors its had provisioned for losses in the conflict of between $30 million and $40 million, though it said its Russian and Ukrainian businesses were nascent and ‘not material’.
CEO Greg Hunt said: Nufarm has nascent operations in Ukraine and Russia and our first priority has been to ensure our people in both countries are safe and supported.
“Secondary to the safety of our people, we are focused on ensuring the security of supply for our customers and continue to monitor developments closely and prepare accordingly.
“Food security is a fundamental right and Nufarm plays a part in ensuring growers can access the products they need to support global and local food supply.”
Nufarm has been consolidating its operations to fewer sites in recent years which involved the closure a manufacturing facility in Botlek, Netherlands and increasing capacity at manufacturing facilities in Wyke, England and in Gaillon, France.
The company has a Ukrainian subsidiary Nufarm Ukraine LLC while AgroDunai has acted as its agent in Russia and Belarus since 2019, handling importation, customs clearance and delivery.
Hunt said the company was taking a prudent approach to assessing the recoverability of its inventory and receivables and associated assets in the two waring countries.
“The total maximum exposure in terms of inventory and receivables held in both countries is less than two per cent of total group inventory and receivables.”
Nufarm said it expected to report underlying EDITDA earnings of between $320 and $340 million for 1H22.
“Nufarm has seen strong demand and increased revenues for our crop protection and seed products during the first half.
“This is a result of soft commodity prices and favourable trading conditions in each of the regions we operate in, our strategic initiatives and investments we have made in our portfolio.”
Global uncertainties have seen an increase in forward sales in the first half.
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