Nufarm consolidates to beat margin pressure

By Phil Boeyen, ShareChat Business News Editor

Friday 3rd August 2001

Chemicals company Nufarm is buying a Victoria-based manufacturing business which it says will consolidate its market position in Australia.

Nufarm has agreed to buy a chemicals formulation facility previously owned by Artfern, a formulation and supply company controlled by one of Australia's biggest rural services companies, Wesfarmers Landmark.

The company says it will also join with Wesfarmers in a 50/50 joint venture to own the Artfern trading and supply entity.

Nufarm MD, Doug Rathbone, says the acquisition of the formulation plant will let the company significantly expand its supply of sulfonyl urea herbicides, which have been sourced to date via third parties.

He says it will also provide a number of production synergies; and deliver a range of surfactants and additives which can be utilised across Nufarm products.

Nufarm says the agreement with Wesfarmers Landmark for joint control of Artfern reflects its objective to consolidate its supply position and to allow rural resellers, such as Wesfarmers Landmark's, to 'house brand' agricultural chemicals.

"It's a good deal for both parties," says Mr Rathbone.

"It secures Nufarm's access to market via the industry's largest distribution channel, and it ensures Wesfarmers Landmark has a guaranteed supply of quality crop protection products.

"This development forms part of a strategy to rebuild margin in Nufarm's Australian crop protection business while, at the same time, allowing us to provide resellers and end users with a broader range of products, and the highest possible standard of technical support."

Two weeks ago Nufarm warned its full-year result will be below expectations because of pressure on margins for its Australian crop protection business.

The company says there has been extremely aggressive pricing activity in the crop protection market.

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