Adverse foreign exchange movements are expected to pull back farm chemicals and seed supplier Nufarm's underlying profit in the first half of fiscal 2016.
"At the half year, we expect the underlying profit after tax to be lower than the prior year," Nufarm chief executive Greg Hunt said at the company's annual general meeting on Thursday.
"Year-to-date, we have incurred exchange losses of $10 million, mainly due to the extreme volatility of the currencies in South America and the high cost of hedging those exposures."
Mr Hunt said the main impact came from foreign exchange losses in Brazil, where the Brazilian real has devalued by 25 per cent in the last four months.
In fiscal 2015, Brazil was Nufarm's biggest crop protection market in terms of revenue and underlying earnings.
Mr Hunt also said sales in Brazil were being affected by wet weather in the south and dry conditions in the central and northern regions associated with the El Nino weather pattern.
Nonetheless plantings of soybeans were expected to grow by three per cent over the year and plantings of corn remain steady.
In local currency terms, Nufarm's first quarter sales in Brazil were ahead of last year but slightly down when translated into Australian dollars.
"Ultimately, if we get growth in local currency terms, we'll be very happy because it's quite a difficult environment there (in Brazil) at the moment," Mr Hunt said.
Although Nufarm's underlying profit is expected to be pulled back mainly by currency movements, the group's underlying earnings in the first half are expected to be in line with or ahead of last year.
Mr Hunt said that was despite challenging market conditions in Brazil and Australia.
In the first three months of the fiscal year, sales in Australia were affected by dry conditions over August to October but were only marginally lower.
"The El Nino forecast for the eastern seaboard is dampening expectations, but there was good rain in early November which helped sales," Mr Hunt said.
"If we get a very hot and dry end to December and January, that will be a negative."
Mr Hunt said cost savings and more efficient manufacturing would support earnings from operations in Australia in the first half.
Nufarm said its North American operations had had a positive start to the year, and first quarter sales in Europe were slightly ahead of the previous period.
Shares in Nufarm were 24 cents, or 2.83 per cent, lower at $8.25.
