Nufarm and Incitec Pivot

Part
01
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Part
01

Profile: Elbert Prado

Elbert Prado is a chemical engineer with vast experience in the chemical industry. He is an alumnus of the Industrial University of Santander.

Education

Work History

Personal Details

Research Strategy

After an exhaustive search, we were unable to find information about Elbert Prado's work accomplishment, a statement on his business philosophies, and recent press articles about him. We analyzed his profile on several sources, including Nufarm annual report, Linkedin, Wallmine, Macroaxis, among others. These sources provided an overview of his career profile with no reference to his business philosophies and work accomplishment. A further search to identify his recent interviews, which would also help us gain insights into his business philosophies and work accomplishments was also unfruitful. We could not even find recent press articles about him after searching through Nufarm's website, especially the press release section. We also searched for his social media profile on Facebook, Twitter, and Instagram, hoping to find the required information. Still, after combing through different similar profiles, we could not locate his profile across the social media platforms.


Part
02
of four
Part
02

Nufarm: Deep Dive

Declining earnings, prolonged dry conditions in Australia, and glyphosate alleged link to cancer are challenges and threats facing Nufarm. The requested information about the issues is presented below.

Declining Earnings

Prolonged Dry Conditions in Australia

Glyphosate's Alleged Link to Cancer

  • Nufarm faces an imminent threat of litigation over its glyphosate-based herbicides. Although science has not proved a causal link between cancer and glyphosate, a recent court ruling regarding the compound in the US sets a new precedence.
  • In a lawsuit involving Monsanto and a man who blamed the company’s glyphosate-based weed killer for his cancer, a California Jury ordered the firm to pay him $289 million worth of damages. The ruling leaves Nufarm’s glyphosate-based herbicides supply business in a precarious situation.
  • Glyphosate's link to cancer is a threat because a ban on glyphosate-based products will lead to a sharp fall in revenues considering that the products account for a fifth of the company’s total earnings.
  • Moreover, the connection is likely to affect the company’s ability to maintain the needed product registrations in various part of the world. Nufarm is also at risk of facing litigations over its glyphosate-based products after the ruling.
  • The ruling news also occasioned a fall in share prices by 4.8% to close at $3.79, the lowest ending price since September 2010.
  • In response to the glyphosate’s cancer connection threat, Nufarm has reaffirmed its commitment to work with regulatory authorities to maintain its registrations. It has also reiterated the fact that science-based regulatory agencies across the globe have declared glyphosate-based herbicides as safe. However, Nufarm is approaching the threat with all due care because of its potential implications on its business.

Part
03
of four
Part
03

Profile: Jeanne Johns

Jeanne Johns is a chemical engineer and a global executive with more than 25 years of working experience in petrochemicals, international refining and oil and gas industries. Jeanne was born and raised in Cleveland, Ohio, and she currently lives in Melbourne’s Southbank with her husband, Marc.

Education

  • Jeanne Johns studied chemical engineering at the University of Cincinnati. She also studied International Executive Program from INSEAD and Leadership and Management Studies from Harvard.

Work History

  • Jeanne Johns started working as an intern in 1986 at BP. In 1999, she was promoted to the position of refinery manager and business unit leader in the Toledo, Ohio area. In 2001, she was appointed as the technical vice president of Petrochemicals in London.
  • In 2004, she became the president of NGLs in Houston, Texas. She later moved to Shanghai, China as the president of Asia Olefins & Derivatives. In 2011, she became the head of S&OR, Downstream, and in 2013 she became the head of OMS and Operations Excellence.
  • Jeanne Johns moved to Parsons Corporations in 2014 as the company's non-executive director. She also held the same position at Tate and Lyle until October 2017.
  • She is currently working as the CEO and the Managing Director of Incitec Pivot Limited since November 2017.

Work Accomplishments

Business Philosophies

  • "Unlocking the dynamic of high performing teams, creating meaning for people, disciplined planning, and constantly thinking of what to change and keeping an open mind in a learning mindset."
  • "Safety is a core value of mine. Risk is all about probability versus outcome. People put the probability so low, and it falls down the risk matrix. But anything is theoretically possible."

Recent Articles

  • A recent article on Jeanne Johns has been published in the Australian Financial. The article is about her interview where she discussed her personal life and her career profile, including her career milestones.

Other Personal Details

  • Jeanne Johns was born in 1963 in a middle-class family in Cleveland, Ohio. She has four siblings, her mother Carol was a human resource manager and her father Frank, a maths professor.
  • She was a basketball star for the Cincinnati University Bearcats basketball team. However, due to her tight schedule, Jeanne Johns has not been able to engage in basketball as her hobby. But, during the weekend, she walks around The Tan, a famous track in Melbourne.
  • Jeanne Johns is married to Marc, an avid golfer. Her current salary is estimated to be AUD$3,208,000.
  • While in school, Jeanne Johns was a high performer in science and maths, which motivated her to pursue a career in chemical engineering at Cincinnati University.
Part
04
of four
Part
04

Incitec Pivot: Deep Dive

Some challenges and threats to Incitec Pivot include those that affect the company's financial health, such as the supply and price of key raw materials, disruptions in plant operations, and climate change.

Challenge/Risk # 1 — Climate Change Risks

  • Natural disasters and seasonal weather conditions are key factors that determine the supply and demand or Incitec Pivot's products and services.
  • Therefore, climate change threatens the company's financial and operational efficiency through its ability to affect the supply of raw materials, the demand for farm and mining customers, and the company's ability to carry out its operations.
  • Any prolonged changes in weather or adverse weather conditions are likely to impact the future profitability and prospects of the company.

Description of the Threat

Solution

Challenge/Risk # 2 — Natural gas supply and price Risks

  • Natural gas is a major input needed by the Incitec Pivot to carry out its company operations.
  • Natural gas is a critical feedstock for the company's nitrogen manufacturing operations; thus, potential disruption of supply poses a risk.
  • The increased price of natural gas will have a negative impact on the company's finances.

Description of the Threat

  • There is a potential threat to the availability of natural gas supply in areas such as Australia.
  • The Australian manufacturing operations may face the issue of a committed, reliable source of natural gas following the expiry of current contractual agreements.
  • The company's 2019 net increase in the cost of gas was $42.5 million and was mainly driven by high gas prices in Gibson Island, Australia.
  • Loss in the company's fertilizer earnings for the financial year 2019 was also attributed to the higher natural-gas prices on the Australian East Coast.
  • In the later part of 2018, the company warned the closure of its Gibson plant due to high gas prices in Australia.
  • The increase in natural gas prices in Australia contributed to a decrease of $245.7 million, or a 29% decrease in EBITA.

Solution

Challenge/Risk #3- Plant Operation Disruptions

Description of the Threat

Solution

Research Strategy

Our main source in this research was Incitec Pivot's Annual Report 2019. The report captured all the required information. However, to arrive at the percentages, some calculations were done.

Calculations:
— EBIT decreased from $556.7 million (2018) to $303.7 million (2019). The difference is $253 million or 45.4% of the 2018 EBIT.
— Pivot's Waggaman earnings decreased = $76.2 million (2018) to $19.2 million (2019). The difference is $57 million or 74.8% of the 2018 earnings.
Sources
Sources