DSO 2.0 ⇑

DIO 16.2 ⇑

DPO 6.5 ⇑

DWC 8.7 ⇑

A lengthening of the net working capital cycle by over a week in 2022, driven by increases in DSO and DIO.

Our sample of Agriculture companies delivered an aggregate 20% increase in revenue during 2022 as the war in Ukraine drove up global grain and cereal prices. Close to 80% of the sample recorded revenue growth, with those that saw a decline in revenue having a higher exposure to the Chinese market, which was impacted by import restrictions.

The well-reported supply side pressures and tightening labour markets, as well as the impacts of adverse weather events, appeared to have been well managed across the sector, with average gross and EBITDA margins remaining stable (relative to the prior year).

In terms of working capital performance, average DWC increased by 8.7 days to 114 days, driven by a 2.0 day increase in DSO (to 57.7 days) and a 16.2 day increase in DIO (to 158.9 days). Of particular note, the sector reported the highest DIO and DWC of all sectors covered in 2022.

The higher inventory load carried by our sampled companies reflected the record seasonal production in 2022 and disruptions to delivery routes in some areas. Flooding in eastern Australia impacted road and rail distribution networks and resulted in delays to the delivery of product to domestic and overseas markets. Cotton and nut producers, whose harvest periods coincided with the wet autumn and winter seasons, were particularly impacted. Wine producers adversely impacted by global shipping delays in 2021, strategically increased inventory levels held overseas to mitigate against the future risk of shipping constraints. By contrast, Aquaculture producers took advantage of increased demand and higher prices to sell down standing inventories of breeding stock and frozen products.

To offset the impact of the increased inventory load, 80% of our sample lengthened their supplier payment cycles. On average, DPO increased by 6.5 days (to 78.7 days) in 2022.

From an international perspective, the average DWC of our sampled companies was higher than those sampled in other regions, with inventory the main differentiator. Asian, European and North American Agriculture companies held c. 2 months’ less inventory than their Australian counterparts in 2022.

Looking forward, the Australian Bureau of Agricultural and Resource Economics and Sciences has forecast a 4% reduction in production levels (with weather events likely to impact operators again in 2023). Meat and Livestock Australia is also projecting cattle and sheep herd numbers to return to pre-drought (2017-2019) levels, with lower domestic demand in the re-stocker market contributing to a forecast softening in beef and sheep prices.

“An ongoing commitment to continuous improvement in Net Working Capital management is the cornerstone to expand Nufarm’s capacity to be consistently cash generative.”

John Gillham, Chairman
Nufarm Ltd
Half year report to 31 March 2022 – Directors Report 19 May 2022


COVID-19 Impact

Net working capital performance

Cash Impact ($'m)*

*A positive cash impact is a “release” of cash from working capital (improvement). A negative cash impact is additional cash invested or “locked up” in working capital (deterioration).

Agriculture - financial year
Days 2021 2022 Change
DSO 55.7 57.7 2.0
DIO 142.7 158.9 16.2
DPO 72.2 78.7 6.5
DWC 105.4 114.1 8.7
Agriculture - half year
Days H1 2022 H2 2022 Change
DSO 53.0 57.0 4.0
DIO 129.8 164.0 34.2
DPO 74.6 79.3 4.7
DWC 93.2 116.6 23.4
Best & Worst
Days Best Worst Spread
DSO 9.6 121.8 112.2
DIO 37.8 375.6 337.8
DPO 168.6 18.3 (150.3)
DWC 13.2 243.4 230.2
International Benchmarking
Days Asia EU US
DSO 74.9 54.9 46.2
DIO 87.5 102.2 100.7
DPO 41.0 86.3 54.3
DWC 113.6 64.3 80.1