Global pesticides and seeds supplier Nufarm expects earnings from its Australian business to improve, but recent dry weather has been a thorn in its side.
Australia's major cropping regions experienced good early summer rains but dry conditions into autumn, Nufarm chief executive Greg Hunt said.
"The very dry February and early March have been a negative and rainfall over the next couple of months will be an important indicator for a successful winter crop season," Mr Hunt said.
Rain helps drive the company's sales of agricultural chemicals and seeds.
Excluding weather impacts, Mr Hunt said he expected the group's Australian business to continue to grow in the second half.
"We expect earnings recovery to continue in Australia, driven by a lower cost base and stronger margins," he said.
"The business will be better positioned to generate consistent returns when the full extent of our costs savings are realised from 2017."
Nufarm unveiled a $91 million first half year loss on Wednesday, in sharp contrast to the $23.1 million profit it made in the previous first half.
One-off restructuring costs of $102.9 million and foreign exchange losses were behind the loss.
However, underlying earnings for the six months to January 31 were up 12 per cent to $71.2 million on the prior year.
Its Australian and New Zealand business, which traditionally dominates earnings in the first half, posted a 30 per cent increase in EBIT contribution.
Mr Hunt said despite tougher economic conditions, Nufarm's market share grew in Latin America, with 22 per cent local currency sales growth.
"The second half is likely to face further headwinds due to currency volatility and tough industry conditions, particularly in Latin America," he warned.
"Higher net financing expenses in the second half will impact underlying net profit after tax."
Speculation Nufarm was a takeover target heightened on Tuesday when Chinese businessman Zhang Hua and his controlled entities Power Growth Global and Brecken International acquired a 5.2 per cent holding.
However, a statement issued to the ASX said the transaction was a financial investment and the holders have no current intention to takeover Nufarm or to request a board seat.
Nufarm's share price was up four cents to $8.16 at 1545 AEDT.
NUFARM BOOKS A HALF-YEAR LOSS:
* Net loss of $91m, compared to $23.1m profit
* Revenue flat at $1.19b
* Interim dividend unchanged at four cents a share
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