Nufarm Ltd.

The negative outlook reflects our view that potentially tough trading conditions could test Nufarm's ability to sustainably improve its operating performance to restore its metrics in line with the 'BB' rating. This includes earnings stability, meaningful free cash flow, and continued deleveraging. We could lower the rating to 'BB-' if Nufarm is unable to reduce adjusted debt to EBITDA below 3.5x. We could also lower the rating if the company does not generate meaningful positive free operating cash flow or its liquidity deteriorates during the next 12 months. This scenario could occur if: Weak trading conditions across Nufarm's operating regions persist through the second half of fiscal 2020 such that earnings does not improve; or Material execution risk occurs associated

...The completed sale of Nufarm Ltd.'s South American business will reduce earnings volatility and strengthen its balance sheet by deleveraging from net sale proceeds. Nufarm announced the sale of its South American operations to Sumitomo Chemical Company on Sept. 30, 2019, following the results release for the year ended July 31, 2019. The A$1,188 million sale represented an attractive valuation and allows Nufarm to reduce earnings volatility, working capital intensity, and lower margins associated with the South American business. The company will use the net sale proceeds to strengthen the group's balance sheet and provide additional liquidity. Earnings will skew toward the second half of fiscal 2020 and the unwinding of seasonal working capital will improve cash flow and enable further deleveraging toward our expectations for the '##' rating. Nufarm reported subpar trading performance for the first half of fiscal 2020 attributed to competition, weakened demand, extreme climatic conditions,...

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