Nufarm plans to consolidate European plants, take 30M euro charge
Nufarm, the agricultural chemicals manufacturer, will take a 30 million euro charge this year to consolidate its European manufacturing operations.
The Melbourne-based company, which makes herbicides and pesticides, plans over the next 18 months to close its manufacturing plant in Botlek, the Netherlands, and increase capacity at its facilities in Wyke, England, and Gaillon, France, it said in a statement.
The changes to the company's European operations come after it last year detailed plans to consolidate its manufacturing in Australia and New Zealand to three sites from six, to save A$16 million a year. The European reorganisation is expected to save at least 16 million euro a year, as part of a cost reduction and performance improvement programme slated to deliver A$100 million in savings over the next two to three years, it said today.
"These changes will result in a more efficient manufacturing base in Europe and will improve our competiveness on a global basis by reducing the unit cost of one of our most important herbicides - MCPA - as well as several other products that are produced in Europe and exported to other markets around the world," Nufarm group executive operations Elbert Prado said in the statement. "The changes will also reduce supply chain complexity, supporting our efforts to improve working capital efficiency across the group."
Most of the one-time charge associated with the change will be booked in the second half of the current financial year, the company said. Some 15 million euro are non-cash costs and there will be incremental capital expenditure of 9 million euro to expand existing plant, it said.
The company is in talks with worker representative groups about the closure of its Botlek plant, which is expected to cut 50 jobs.
Nufarm said the group's first half earnings before interest and tax, scheduled for release on March 25, are expected to be ahead of the same period last year.
Shares of Nufarm last traded at A$5.94 on the ASX, and have gained 25 percent so far this year. The stock is rated 'hold' based on the consensus of 11 analysts polled by Reuters.