Nufarm to close Melbourne site, axe 56 workers, in $15m savings blitz

Crop protection company Nufarm will close a site at Laverton in Victoria over the next 18 months, making 56 workers redundant.

Part of Nufarm’s operations in Laverton. Picture: Yuri Kouzmin

ASX-listed crop protection and seeds company Nufarm will close one of its three factories in Australia, saving $15m a year, and curtail operations at its plant in Austria.

Chief executive Greg Hunt announced the closure and sale of its Raymond Road site in Laverton in Melbourne, which produces insecticides and fungicides, and the scaling back on its operation in Linz, Austria, late on Tuesday.

The closure of the Raymond Road site will take about 18 months and result in about 56 redundancies over that time.

“These are difficult decisions for our colleagues, however they are another step in building a stronger and more resilient business,” Mr Hunt said.

Nufarm has been under pressure to maintain producing at scale in Australia in the wake of cheaper imports.

Mr Hunt said while the company’s MCPA synthesis and herbicide formulation operations remained competitive, “gaps have emerged in the competitive position of our 2,4-D synthesis and insecticide and fungicide formulation”.

To that end, Nufarm will cease synthesis of the herbicide 2,4-D at the Linz site in Austria early next year, delivering an estimated annual earnings benefit of $10m. The closure of Raymond Road is expected to save the company $15m a year.

“Today’s decision follows careful consideration of both external market dynamics and the future needs of our business,” Mr Hunt said.

“We are confident it strikes the right balance between optimising sourcing cost and retaining flexibility within our global supply chain.”

Mr Hunt estimated $25m in one-off cash costs from the restructuring to be partially offset by the sale of the Raymond Road property. It comes after the company launched a program to improve financial returns across its entire business.

“The performance improvement program is continuing across each of our regions and the corporate centre. It is a broad ranging program to improve every aspect of our business. A further update on progress of the program will be provided when we announce full year results,” Mr Hunt said.