The Nufarm Limited share price falls on earnings downgrade

Nufarm Limited (ASX: NUF) was expecting a great second half of FY18, but had to face adverse weather conditions.

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Shares in agricultural chemical supplier Nufarm Limited (ASX: NUF) fell 1% to $8.80 on Tuesday, weighed down by the downgrade of the company's earnings guidance for the 12 months to July 31.

Nufarm's prior forecast for FY18 underlying EBIT was in a range of 5% to 10% up on the $302 million of the previous year. The company now expects an increase of just 5%.

The revision reflects adverse weather in Australia, where unusually dry conditions in April affected demand for both Nufarm's pesticides and canola seeds, and in North America and Europe, where extended cold weather in spring caused a contraction of sales.

Furthermore, European authorities restricted neonicotinoids, a class of pesticides, to indoor use only. The restriction won't be in place until the end of the financial year, but it may affect sales already in FY18. Only two months ago, Nufarm acquired a portfolio of crop protection formulas registered for use in Europe for US$500 million.

CEO Greg Hunt said the business is well positioned to withstand adverse seasonal conditions and will deliver growth ahead of the global crop protection market.

Motley Fool contributor Tommaso Autorino has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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