Makhteshim-Agan reports record Q1 sales

Makhteshim-Agan Industries, the worlds biggest generic agrochemicals manufacturer, reported slightly lower first-quarter net profit yesterday - but its earnings beat estimates as sales climbed thanks to overseas expansion.

Makhteshim-Agan, the main subsidiary of IDB group holding company Koor Industries, moved back into the black in the first quarter of 2010 after admitting to losses in the third and fourth quarters of 2009. However, against the parallel quarter, earnings fell.

Net profit in the January-March period was $70.9 million, down 9% from $78.2 million a year earlier. One main reason was a drop in income from interest on its cash.

Revenue edged up 0.1% to $723.1 million as the company expanded in eastern Europe and India. This was partly offset by a decline in prices for its products, Makhteshim-Agan said. Makhteshim-Agan had been expected by equity analysts to net $43 million on revenue of $693 million, according to the average of estimates from seven banks and brokerages polled by Reuters.

Operating income also increased only slightly, by 1% to $105.5 million.

Makhteshim-Agan makes generic pesticides, relying heavily on the broad-spectrum weed-killer glyphosate. It sells its wares in more than 100 countries worldwide. Since it sells to farmers, its results are highly dependent on the state of the weather. During the first quarter of 2010, it took a hit from the unusually cold winter in North America and Europe, which delayed the start of the planting season.

Cash flow from regular operations was $17.9 million in the first quarter of 2010, compared with a cash burn of $62.7 million in the parallel quarter of 2009, and cash flow of $210 million for the whole of 2009.

Analyst Amir Adar at Migdal Capital Markets said the results had surpassed his expectations. He hadnt thought sales to Europe would pick up before the second quarter of 2009, because of the inclement weather, but they did, Adar said.

Makhteshim-Agan financial results for the first quarter( ended Mar 31, 2010)
In millions of US$, except for percentages	Q1 2010	Q1 2009	Change
Sales	$723.1	$722.3	+0.1%
EBITDA EBITDA margin	$132.8 18.4%	$128.4 17.8%	+3.4%
Gross profit Gross margin	$232.9 32.2%	217.4 30.1%	+7.1%
Operating profit Operating margin	$106.5 14.7%	$105.6 14.6%	+0.9%
Net profit Net margin	$70.9 9.8%	$78.2 10.8%	-9.4%
Cash flow from operating activities	$12.8	$(62.7)

Breakdown of sales:	Q1 2010	Q1 2009	Change
Europe	372.5	367.6	+1.3%
Asia Pacific	93.8	65.6	+43.0%
North America	119.6	124.4	-3.8%
South America	116.6	143.8	%-18.9
Israel	20.6	20.9	%-1.4