Nufarm took a sideswipe at Monsanto's Roundup weedkiller brand
as the Australian agrichemicals group sought to cushion the impact of the loss,
after 11 years, of a $100m contract for using the brand.
However, Nufarm shares tumbled 15% at one point in Sydney trading.
The group's chief executive, Doug Rathbone, said that the market
for glyphosates - the generalist herbicide of which Roundup is a branded
version – had "changed significantly over the past few years", becoming increasingly
In Australia, where Nufarm has held exclusive rights for
using Monsanto's Roundup brand since 2002, the market change meant glyphosates
were "generating substantially less value for suppliers".
"The brand premium attached to Roundup has consequently been
eroded," Mr Rathbone said.
The comment - which follows a move by Monsanto itself some
three years ago to reduce the emphasis of Roundup in its growth plans – came as
Nufarm revealed that it had from August lost regional rights to use the brand,
worth $100m in revenues a year to the group.
"Nufarm received notice today from Monsanto that agreements relating
to the exclusive distribution of Roundup branded glyphosate in Australia and
New Zealand are to be terminated," the group said.
Mr Rathbone said that Nufarm would now focus on building its
own glyphosate brands, "where we can build long term value on a more secure
basis and ensure our cost competitiveness".
Indeed, the group forecast that the loss of the agreement -
under which Nufarm had to pay a distribution fee to Monsanto for all its sales
of glyphosate in Australia and New Zealand - would not have a "material impact"
However, the statement failed to reassure investors, who
sent Nufarm shares to their lowest in nearly eight months before recovering
some ground to close at Aus$4.85, down 12.1% on the day.
The statement represented a second blow to a recovery in
Nufarm stock, which also fell sharply in January after the group warned that "unusually hot" weather in Australia had hurt demand for its products.
Nufarm claims a share of about 50% in Australian glyphosate
sales, with about 60% of those takings stemming from Roundup-branded products.