Isagro BOD approves Drafted Financial Statements as of December 31st, 2019
May. 8, 2020
The Market and Isagro
2019 was characterized by market and weather conditions which were particularly unfavourable, with general downturns at distributor level (mainly in North America and Italy) and by a tightening of the regulatory picture in Europe, with the “phase-out” of different products in the European Union. According to the data provided by Phillips McDougall and Agro Pages, in 2019 the market at global level is estimated substantially stable versus last year, with a marginal growth of approximately 0.4% in USD terms and a total value of 57.8 dollar billion at supplier level, even with different dynamics in the different geographic areas.
In such context, Isagro, selling largely to national distributors, with North America and Europe representing its main markets, was particularly penalized; in fact, it was impacted in particular by the need of two of its major customers, one in the United Stated and one in Italy, to limit purchases for the period also in order to consume existing stocks at the start of the year - stocks that are normally established to cover the next campaign.
2019 consolidated data
In 2019, Isagro registered:
- Revenues equal to 105.4 Euro million versus the 124.8 million of 2018 re-stated;
- an EBITDA negative of 2.6 Euro million versus the positive value of 9.3 million of 2018 re-stated;
- a Net result in loss for 13.9 Euro million versus the profit of 0.4 million of 2018 re-stated;
- a Net financial position of 34.4 Euro million, which includes the effect of the first adoption of IFRS 16 for 4.5 Euro million, versus 45.1 Euro million as of December 31st, 2018 and with a debt/equity ratio of 0.38 (equal to 0.33 net of IFRS 16 effect)
The decrease in Revenues is attributable to the combined effect of:
- lower Revenues from Agropharma sales for 13.8 Euro million and lower Revenues from Services sales, such as toll manufacturing proceeds, for 1.3 Euro million;
- lower Revenues from M/L Agreements for 4.4 Euro million.
With regard to the variation in Revenues from Agropharma sales versus 2018, the lower sales are mainly attributable to lower revenues of copper-based and Tetraconazole-based products realized by the parent company Isagro S.p.A. to the customers Sumitomo for 6.9 Euro million in Italy and Gowan for 9.1 Euro million in the USA, also due to de-stocking by these distributors, partially offset by higher sales of copper-based and Kiralaxyl-based products in Europe for 1.8 Euro million.
With regard to EBITDA, the negative variation of 11.9 Euro million of 2019 vs. 2018 re-stated is, among increasing and decreasing balances, mainly attributable to lower margins from sales of products and services and to lower proceeds from M/L Agreements.
With reference to cash flows, in 2019, excluding IFRS 16 effect, Isagro generated a positive free cash flow of 15.2 Euro million, represented:
- for 32.0 million, by the consolidated net financial cash flow deriving from the divestment of Isagro Asia, resulting from the price component cashed-in in December 27th, 2019, equal to 46.2 million Euro, net of the NFP at credit of Isagro Asia as at December 31st, 2018, equal to 14.2 Euro million;
- for -16.8 million, by the operating cash flow of the period, that includes an increase in Net working capital by 0.7 Euro million on a like-for-like basis versus 2018.
2019 parent company Isagro S.p.A. data
With reference to 2019 results of Isagro S.p.A., they are represented by:
- Revenues equal to 94.7 Euro million, decreasing by 18.9 million (-17%) vs. the 113.6 Euro million of 2018;
- an EBITDA negative for 3.2 Euro million, decreasing by 10,9 million vs. the 7.7 million of 2018;
- a Net result in profit of approximately 17.2 Euro million vs. the loss of 5.9 million of 2018. It is highlighted that at Parent company Isagro S.p.A. level the positive result of 2019 is fully attributable to the capital gain realized on the sale of the controlled company Isagro Asia, recorded at the accounting value of the original cost and of the capital increases for a total value at the Closing moment of around 14 Euro million. Such profit will be allocated as follows: (i) to the Legal reserve for 0.9 Euro million, (ii) to Unavailable reserve for fair value valuation of shares pursuant to Article 6, paragraph 1, letter b) of Legislative Decree no. 38/2008 for 2.7 Euro million, (iii) to cover the losses of previous years for 1.4 Euro million and (iv) to “Retained earnings” for 12.2 Euro million to be posted, pursuant to Article 24 of the By-Laws, in a specific Equity reserve;
- an Equity of 93.9 Euro million as at December 31st, 2019, vs. the value of 75.8 Euro million of December 31st, 2018;
- a Net financial position of 30.4 Euro million as at December 31st, 2019 (which includes the effects of first adoption of IFRS 16 accounting principle for 4.2 Euro million), vs. the value of 55.4 Euro million as at December 31st, 2018.
With reference to the current year, Isagro expects, before the possible effects deriving from the recent global sanitary crisis, a level of sales of products and services substantially in line with the one of 2019. Moreover, it appears comforting that the first quarter 2020 preliminary data indicate a growth of sales of products and services of over 10% versus the first quarter 2019.
The Net result expected in 2020 will depend in a decisive way by extraordinary operations consistent with the redefinition process of the business model, especially the sale of Fluindapyr which Closing is expected to take place by September 30th.
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