Nufarm Ltd

L1 Capital Long Short Fund continues to hold its position in Nufarm despite a 7% decline in shares, which reflects broader challenges in the global agriculture sector, including drier weather and a reduction in on-farm purchases by farmers. The shift to just-in-time purchasing and the normalization of supply chains following COVID-19 led to a contraction in demand for crop protection products, particularly in North America. This resulted in Nufarm downgrading its FY23 EBITDA guidance by around 5%. However, L1 Capital views this as a relatively strong performance given the industry's headwinds, especially compared to peers that faced even larger earnings declines. L1 Capital remains positive on Nufarm’s long-term outlook, noting the company’s improvements over recent years. Nufarm is strengthening its crop protection business with high-margin, high-growth proprietary formulations and has made significant strides in its seeds business, including innovations like Omega-3 and Carinata. These advancements are expected to drive strong earnings growth in the Seeds division for years to come.

L1 Capital Long Short Fund continues to hold its position in Nufarm despite an 8% decline in shares, reflecting broader challenges in the global agriculture sector. The decline is driven by drier weather conditions and a reduction in on-farm purchases as farmers shift to just-in-time inventory practices following the COVID-19 build-up. This has led to a contraction in demand for crop protection products, particularly in North America. Nufarm's 5% downgrade to its FY23 EBITDA guidance is viewed by L1 Capital as a relatively strong outcome given the industry headwinds, especially when compared to peers experiencing much larger earnings declines. The Fund remains positive on Nufarm's long-term outlook, noting the company's improved quality over the past few years. Nufarm is expanding its crop protection business with high-margin, high-growth proprietary formulations and its Seeds division is gaining traction with innovations like Omega-3 and Carinata, which are expected to drive strong earnings growth for years to come.

L1 Capital Long Short Fund continues to hold its position in Nufarm, despite a 9% decline in shares, which reflects broader challenges in the global agriculture sector. The decline is largely due to drier weather conditions and a shift to just-in-time purchasing by farmers after the build-up of inventories during the COVID-19 pandemic. This has led to a contraction in demand for crop protection products, particularly in North America, and Nufarm recently downgraded its FY23 EBITDA guidance by around 5%. However, L1 Capital views this as a relatively strong performance given the tough operating environment, especially compared to Nufarm’s peers, who experienced larger earnings declines. The Fund remains positive on Nufarm’s long-term outlook, highlighting the company's continued improvement over recent years. Nufarm is expanding its crop protection business with high-margin, high-growth proprietary formulations and is also seeing strong growth in its Seeds division, with innovations like Omega-3 and Carinata gaining traction. These developments are expected to drive earnings growth in the Seeds division for many years to come.

L1 Capital Long Short Fund has updated its investment thesis on Nufarm Ltd, noting the strong performance of its seed technologies segment, which has grown EBITDA at a 49% compound annual growth rate (CAGR) over the past three years, now representing 20% of group earnings. L1 Capital Long Short Fund continues to hold Nufarm because it sees significant growth potential in this segment, with the company targeting EBITDA of approximately $150 million by FY26 and over $400 million by FY30. A key driver of this growth is Nufarm’s proprietary Omega-3 seed technology, which the Fund believes offers a scalable and sustainable solution to meet the growing demand for Omega-3 from the fish farming industry. This strategic focus positions Nufarm for continued growth in a high-demand sector, supporting the Fund’s positive outlook for the company’s future.

L1 Capital Long Short Fund has updated its investment thesis on Nufarm Ltd, following the company’s solid FY23 results despite facing challenging weather conditions and destocking impacts. The Fund continues to hold Nufarm because it sees significant improvement in the company’s outlook, with better agricultural conditions and a normalisation of on-farm inventory levels expected to support more stable ordering patterns moving forward. L1 Capital Long Short Fund is particularly positive on Nufarm’s evolution into a higher-quality business, strengthened by the company’s focus on high-margin, high-growth proprietary crop protection formulations. Additionally, Nufarm’s seeds business, which has successfully commercialised innovations like Omega-3 and Carinata, is poised to drive strong earnings growth in the years ahead. With these positive developments, the Fund remains confident in Nufarm’s long-term growth trajectory.