Shares in agricultural chemicals supplier Nufarm plunged 25 per cent in early trading on the Australian Securities Exchange, following the company’s profit downgrade after the market had closed on yesterday.
Within 10 minutes of the opening bell, Nufarm shares were $1.31, or 25 per cent, lower at $3.93. They closed even lower, down $1.49, or 28 per cent, at $3.75.
Nufarm said today that it would not achieve an existing borrowing covenant by a small margin and the company is in talks with its lenders seeking a temporary adjustment.
The company said it has an earnings before interest, tax, depreciation and amortisation to net interest covenant ratio which it will not be able to keep at July 31, the end of its fiscal year.
‘‘Nufarm has bilateral banking arrangements with a number of providers and has commenced discussions with those lenders to seek a temporary adjustment to the interest cover ratio,’’ Nufarm said.
Nufarm said it would remain in compliance with its net debt to equity (gearing) and net debt to EBITDA covenant ratios.
Yesterday, Nufarm slashed its annual profit guidance by half, blaming poor weather and low demand, and says it has been unable to meet sales and margin expectations.
Nufarm chairman Donald McGauchie also said the board would review Nufarm’s strategic direction.
Nufarm said it expects to generate a net operating profit, which excludes material items, of between $55 million and $65 million, compared to its previous guidance for an operating profit of $110 million to $130 million.
AAP