Nufarm shares recover after allaying disclosure breach concerns
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More news: Nufarm’s share price has partly recovered declines that followed last Wednesday's weak earnings report after telling the ASX that the figures were not materially different from market expectations.
The numbers: Nufarm’s share price was up 5.67% to $2.61 at 11:43am AEST, although this is still 35.1% lower than its share price prior to the results announcement.
Nufarm denies ASX breach after share price crashed on weak earnings
The news: Agricultural chemicals business Nufarm has told the ASX that its poor earnings announcement was not materially different from market expectations, despite it leading to shares losing a third of their value, after the exchange operator raised continuous disclosure concerns.
The numbers: On 21 May, Nufarm reported a 39.5% year-on-year drop in earnings in the six months to 31 March. Its share price tanked from $4.02 immediately before the results announcement to $2.81 at close.
This prompted the ASX to send an Aware Letter to Nufarm on 23 May, flagging a potential breach of the exchange’s continuous disclosure policy because the earnings may have differed materially from the market expectations.
Nufarm shares were up 1.82% to $2.52 at 10:30am AEST on Monday.
The context: In its response to the letter, Nufarm said it did not consider its earnings information in relation to 1H25 EBITDA to have differed significantly, because it expected it to be 10% different after an adjustment of its omega three inventory valuation, which was recommended to the board on 16 May.
Nufarm also flagged that ASX guidance recommends careful consideration of public notification when the expected difference between actual or projected earnings and a company’s best estimate of market expectations is 15% or greater.
The company also said its revenue was within 3% of analyst consensus.
The agricultural chemicals business also argued that its EBIT and NPAT are not considered key metrics for assessing its performance against market expectations, as the measures are relatively small numbers, meaning changes are amplified when expressed as a percentage and are particularly sensitive to EBITDA changes.
Nufarm also pointed to several other potential factors that influenced the selloff of its shares, including downward pressure on fish oil prices, increased net debt and leverage, and the announcement of a review of its seed technologies business.
The source: ASX
