January 30, 2008

Australian company suffers US$20 million loss on soy contracts 

Australian crop chemical company Nufarm Ltd. Wednesday (January 30, 2008) reported a AUS$22.6 million (US$20.04 million)after-tax loss on a one-time liability from a hedging position negotiated by the previous management of now wholly-owned Brazilian unit Agripec.

The contract left an exposure tied to the rising price of soy, but the contract has now been settled and the loss will be treated as a non-operating item, the company said.

The practice of accepting soy as security, known as barter trade, remains a widely-used risk management approach by crop protection companies in Brazil, but any such future activity by Nufarm will be structured so that commodity-price risks are appropriately addressed, it said.

Business conditions in Brazil are strong and will make a positive contribution on an operating basis to the company's 2008 full year, it reported.

Business in Australia improved dramatically in December and January, it said.

Nufarm's operating profit for the fiscal first half ending Jan. 31 will be at the upper end of a guidance range of A$18 million to A$23 million advised in December, it said.