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Sept 2 (Reuters) - Australian agricultural chemicals maker Nufarm Ltd NUF.AX on Wednesday warned of an up to 31% drop in full-year underlying core earnings due to a writedown of its Europe assets owed to lower earnings outlook and rising costs.
The company flagged an impairment charge of about A$215 million ($158.52 million) to reflect expectations of continued margin pressure on its products amid higher manufacturing costs and rising competition in the region.
Hot and dry weather conditions in Europe during the second half of the year hurt demand for crop protection, the company said, adding that the coronavirus outbreak further weakened demand in ornamental markets.
As a result, Nufarm expects its fiscal 2020 underlying core earnings between A$290 million and A$300 million, compared with A$420.3 million a year earlier.
"We believe the European business has reached an earnings trough in fiscal 2020, however it is appropriate to take this step to revise the carrying value of the assets," Chief Executive Officer Greg Hunt said in a statement.
Including the impact of the sale of South American assets, underlying core earnings on a continued operations basis are expected to be between A$230 million and A$240 million, Nufarm said.
In March, the Brazilian competition regulator cleared the sale of Nufarm's South American crop protection and seed treatment assets to its biggest shareholder, Japan's Sumitomo Chemical Co Ltd 4005.T . = 1.3563 Australian dollars)