Cheminova agchem sales up 5% in Q3 2013

Cheminova’s agrochemicals sales posted a 5.4% increase to DKK 1,475 million in the third quarter ended 30 September 2013. Revenue was impacted by negative exchange rate fluctuations of DKKm 190 in Q3. The divestment of Stähler Switzerland had an impact on third-quarter revenues of DKK 20 million. Lower insect pressure than usual towards season end in North America also impacted the third-quarter sales.

Cheminova’s sales results (DKK million)
Q3 ended Sep. 30	Q3 2013	Q3 2012	%change	Nine-month 2013	Nine-month 2012	%change
Sales Total	1,575	1,469	+7.2	5,096	4,806	+6.0
-Agrochemicals	1,475	1,400	+5.4	4,812	4,545	+5.9
-Other activities	100	69	+44.9	284	261	+8.8
EBITDA**	159	121	+31.4	688	558	+23.3
EBIT*	112	80	+40.0	544	436	+24.8
** earnings before interest and tax depreciation and amortization * earnings before interest, tax,

Consolidated sales were up by 7.2% to DKK 1,575 million in the third quarter. Adjusted for the divestment of Stähler Switzerland and the exchange rate fluctuations, corresponds to organic growth of 22%. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 31.4% to DKK 159 million. Consolidated earnings before interest, tax (EBIT) improved 40% to DKK 112 million.

Cheminova’s agrochemical sales recorded a 5.9% increase to DKK 4,812 million for the nine months. Sales were impacted by exchange rate fluctuations of DKKm 272 and the divestment of Stähler Switzerland by DKK 129 million.

Consolidated EBITDA for the nine months rose by 23.3% to DKK 688 million ,while EBIT increased by 24.8% to DKK 544 million.

Sales by region

Europe sales were flat at DKK 369 million in Q3. Europe was Cheminova's largest region for the first nine months of 2013. In Q2, the region was affected by a cold and wet climate, particularly in Northern Europe, however, after a positive season end, the region showed satisfactory developments in Q3. Adjusted for the divestment of Stähler Switzerland, organic growth was 7% in Q3. The progress is broadly based, but market developments been satisfactory, and performance in major markets such as France, Germany, Spain and Italy is also benefiting from the introduction of new products and from increased market/segment penetration with a broad and differentiated product portfolio. However, the UK market was affected by difficult climatic conditions and thus contracted considerably in 2013, which to some extent has been compensated by a larger market share. Nine-month sales rose 2.9% to DKK 2,113 million.

Cheminova’s sales by region (DKK million)
Region	Q3 2013	Q3 2012	%change	Nine-month 2013	Nine-month 2012	%change
Europe	369	369	0	2,113	2,054	+2.9
North America	93	87	+6.9	462	361	+28.0
Latin America	659	654	+0.8	1,222	1,184	+3.2
International	366	315	+16.2	1,028	975	+5.4
Global activities	88	44	+100	271	232	+16.8
Total	1,575	1,469	+7.2	5,096	4,806	+6.0

Latin American sales slightly rose by 0.8% to DKK 659 million in Q3. The season started with increasing demand for crop protection products, and the region achieved organic revenue growth of 19% in Q3. In Brazil, where the acreage planted with soybeans again has been increased, the organic growth was even higher, while the sales in Argentina and Colombia were lower, among other things due to continued streamlining of the product portfolio. The rising soybean acreage in Brazil underpins a continued positive outlook for the season. As a consequence of further market penetration with newly introduced products such as the unique mixture of azoxystrobin and flutriafol, the region is expected to see continued positive developments. Nine-month sales were up by 3.2% to DKK 1,222 million.

Sales in North America boosted by 6.9% to DKK 93 million despite low insect pest pressure. Strong growth in selective herbicides and continued growth in flutriafol-based fungicides has resulted in organic revenue growth of 13% in Q3 despite lower sales of insecticides. In the nine-month period, organic growth of 30% was achieved. The market position in the region is expected to be further strengthened in the coming years with the launch of new products, e.g. azoxystrobin-based fungicides and several selective herbicides. Nine-month sales increased by 28% to DKK 462 million.

The international region, comprising Asia, Australia, New Zealand, the CIS countries, the Middle East and Africa, realised satisfactory growth in Q3, achieving organic revenue growth of 35%. India had a positive growing season following a good monsoon, and Asia and the CIS countries saw growth. Furthermore, a small revenue increase was realized in Australia, which continues to be a very competitive market. However, an improved product portfolio is expected to strengthen future earnings. The international region sales increased by 16.2% to DKK 366 million in Q3. Nine-month sales rose 5.4% to DKK 1,028 million.

Sales by category

In Q3, herbicides sales rose by 11.6% to DKK 357 million, accounting for 23% (22% Q3 2012) of revenue. The sulfonylurea herbicides and the selective pethoxamide-based herbicides showed continued progress.

Cheminova’s sales by category (DKK million)
Category	Q3 2013	Q3 2012	%change	Nine-month 2013	Nine-month 2012	%change
Herbicides	357	320	+11.6	1,565	1,434	+9.1
Insecticides	748	714	+4.8	1,947	1,853	+5.1
Fungicides	312	293	+6.5	966	947	+2.0
others	58	73	-20.5	334	311	+7.4
Total	1475	1,400	+5.4	4,812	4,545	+5.9

In Q3, Insecticides were the largest category with sales up by 4.8% at DKK 748 million, representing for 47% (48% Q3 2012) of revenue. Several new products experienced satisfactory growth, including products based on the active ingredients abamectin and gamma-cyhalothrin. Demand for traditional products such as malathion, chlorpyrifos and dimethoate has also been satisfactory.

Relative to Q3 2012, fungicide sales were up by 6.5% at DKK 312 million in Q3 and accounted for an unchanged part of total revenue of 20% (20% Q3 2012). Flutriafol is still developing positively following the US launch of a new mixture, and market penetration for azoxystrobin is strengthened in step with registrations being obtained in more countries.

Sales of other crop protection products accounted for 4% (5% Q3 2012) of revenue, while other activities accounted for 6% (5% Q3 2012) of revenue.

Outlook

Cheminova expects the crop protection market to grow in Q4 following a good start to the season in Latin America. As a consequence of the unfavourable developments in exchange rates, especially for Brazilian reals, Indian rupees and Australian dollars, outlook of revenue in Danish kroner is adjusted to approx. DKK 6.5 billion compared to previously of up towards DKK 6.8 billion. Earnings outlook is specified to an EBITDA of approx. DKKm 800 against previously an EBITDA margin of approx. 12%, while the outlook for a positive free cash flow is maintained unchanged.