30th January 2008
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Company Announcement
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Nufarm books $22.6 million non-operating loss on Brazil soybean contract
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The company disclosed at its Annual General Meeting on December 5, 2007, that it had become aware of a one-off liability arising from a hedging position negotiated by the previous management of its Brazilian subsidiary, Agripec, prior to that business becoming a wholly owned Nufarm subsidiary.
The contract left an exposure tied to the rising price of soybeans. The soybean price has continued to rise strongly in the period since December last year and the resulting liability has increased relative to previous guidance provided at the AGM.
Nufarm Limited announced today that it has settled the contract, resulting in an after tax loss of $22.6 million. The loss will be treated as a non-operating item.
While the practice of accepting soybeans as security – known as ‘barter trade’ - remains a widely used risk management approach by crop protection companies in Brazil, any future barter trading activity by Nufarm will be structured so that commodity price risks are appropriately addressed.
Nufarm said today that business conditions in Brazil are strong and its Brazilian business will make a very positive contribution, on an operating basis, to Nufarm’s 2008 full year result.
The company also commented that business conditions in Australia had improved dramatically in December and January and that the group’s operating result for the six months to the end of January will be at the upper end of the guidance ($18 - $23 million) provided at the AGM in December.
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Further information:
Nufarm Limited
Robert Reis
+61 3 9282 1177
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