Nufarm Limited (ASX:NUF) has announced that it will shut down its manufacturing operations at Calgary in Canada as part of its ongoing performance improvement program.
The fertilizer and agricultural chemicals company aims to restructure its manufacturing footprint in North America. The company states that closing down its manufacturing operations at Calgary will enable it to build a more responsive, flexible and cost effective structure in the North American region.
Nufarm's remaining Canadian distribution centres, which serve customers directly, will operate with increased capacity to enhance the response time taken to serve a customer. Nufarm will also retain all sales, marketing and customer facing operations in the country.
Nufarm’s Group Executive, Elbert Prado said: “The decision to close the Calgary manufacturing facility is part of the company’s commitment to improve the performance of its operations.”
The General Manager for North America, Brenden Deck commented: “We are committed to continuing support and grow our presence regionally through the delivery of quality products and services that meet the needs of local farmers. The Canadian market is important for Nufarm and we see significant potential growth opportunities.”
According to the company, the savings obtained through this operation are part of the performance improvement program announced in February 2015 when it committed itself to deliver a net EBIT benefit of $116 million by FY18. The current deal will improve the company’s EBIT by $3.3 million. Nufarm also reported that it will record one-off restructuring costs in the current financial year of $9.5 million, of which $3.7 million is a non-cash component.
The company’s Welshpool site in Western Australia has also been closed down and is now in the process of being sold. Its other manufacturing facilities in New Zealand, Queensland and the Netherlands are in the process of being shut down.
NUF has dropped 4.4% since the announcement and is trading at $8.47 as of 1:00 PM.
Author: Imran Valibhoy
Nov 24, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.