Nufarm Ltd., (NUF) Australia’s largest supplier of farm chemicals, headed for its biggest drop since 2010 in Sydney after saying it will lose BASF AG’s distribution rights next year and its local unit will miss its profit target.
The stock fell as much as 9 percent to A$5.76, poised for its largest decline since July 16, 2010. It was down 8.7 percent at A$5.78 as of 12:27 p.m. local time. The benchmark S&P/ASX 200 Index gained 0.3 percent.
BASF advised this week it will terminate its distribution agreement to sell BASF crop-protection products in Australia starting from March next year, ending a 10-year contract, the Melbourne-based company said today in a statement. Nufarm also said “more challenging” trading conditions in Australia have hurt profit in the country, although it maintained its global forecast for higher underlying first-half profit.
The Australia and New Zealand operations in the half year ending Jan. 31, as well as the full-year result, are expected to be “well down” on the previous year, Nufarm said.
“While the Australian results will be below expectations,” Nufarm’s “business in other parts of the world has performed more strongly than expected, particularly in South America and Europe,” the company said.
Annual sales generated by BASF products distributed by Nufarm Australia and unit Crop Care since 2004 are less than 10 percent of total Australian revenues and less than 3 percent of Nufarm’s global sales, it said.
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