Cheminova agchems sales up 4% in 2013

Cheminova’s agrochemicals sales posted a 3.9% increase to DKK 6,182 million in 2013. Revenue was negatively impacted by the developments in foreign exchange rates by 8%, while the divestment of Stähler Switzerland had a negative impact of 2%. Revenue was also under pressure from a low level of insect infestation in North America and drought in Australia.

Cheminova’s sales results (DKK million)
Q4 ended Dec. 31	Q4 2013	Q4 2012	%change	Full year 2013	Full year 2012	%change
Total sales	1,502	1,457	+3.1	6,598	6,263	+5.3
-Agrochemicals	1,370	1,404	-2.4	6,182	5,949	+3.9
EBITDA**	133	114	+16.7	821	577	+42.3
EBIT*	93	66	+40.9	637	407	+56.5
** earnings before interest and tax depreciation and amortization * earnings before interest, tax

Consolidated group annual sales were up by 5.3% to DKK 6,598 million. while the organic growth was 15%. Revenue was down 2% due to the divestment of Stähler Switzerland and down 8% due to the negative foreign exchange rate impact. Consolidated EBITDA rose by 42.3% to DKK 821 million, while EBIT increased by 56.5% to DKK 637 million.

Fourth-quarter agrochemical sales dropped by 2.4% to DKK 1,370 million. The negative impact from the divestment of Stähler Switzerland amounted to DKK 5 million and the currency effect was negative with 12%, primarily relating to Latin America.

Consolidated group revenues boosted by 3.1% to DKK 1,502 million for the quarter. EBITDA increased by 16.7% to DKK 133 million. EBIT improved by 40.9% to DKK 93 million.

Sales by region

Europe was the largest region for business, and sales were up by 1.6% to DKK 2,520 million accounting for some 38% of consolidated revenues. Northern Europe in particular was affected by a very cold and wet climate in the second quarter. However, the region delivered a satisfactory second half of the year after a good end of the season.

Cheminova’s sales by region (DKK million)
Region	Q4 2013	Q4 2012	%change	Full year 2013	Full year 2012	%change
Europe	407	426	-4.5	2,520	2,480	+1.6
Latin America	763	768	-0.7	1,985	1,952	+1.7
International	68	32	+112.5	1,096	1,007	+8.8
North America	143	124	+15.3	605	485	+24.7
Global activities	119	107	+11.2	390	339	+15.0
Total	1,502	1,457	+3.1	6,598	6,263	+5.3

Latin America sales increased 1.7% to DKK 1,985 million , representing 30% of consolidated sales. Good conditions for the agricultural sector and an increasing demand for crop protection products resulted in a satisfactory end of the season in Latin America. The region recorded an organic growth of 17% in 2013. Growth was driven, in particular, by Brazil, where the soybean acreage has increased, and where the incidence of the Helicoverpa larva in soybeans had a positive effect on sales of insecticides in the fourth quarter. The general streamlining of the product portfolio in the region − which was implemented in 2012 − was continued in 2013. Further market penetration by recently introduced products, such as flutriafol- and azoxystrobin-based products, is generally expected to strengthen the market position in the region.

Sales in North America boosted by 24.7% to DKK 605 million, making up 9% of consolidated sales. After a good first half of the year, the region created further growth in the second half of the year despite climatic conditions leading to a low level of insect infestation and reduced sales of insecticides. Continued growth for selective herbicides and a satisfactory growth for flutriafol-based fungicides resulted in a total organic growth in the region of 27%. Following the introduction of fungicides based on flutriafol and azoxystrobin as well as several new selective herbicides, the market position in the region is expected to be further strengthened in the coming years.

The international region, comprising Asia, Australia, New Zealand, the CIS countries, the Middle East and Africa. The region was favored by a good monsoon in India, while market conditions in Australia were hampered by extreme drought. Also, several Arabic countries were influenced by political unrest. All in all, the region posted an organic growth of 21%. Earnings were under pressure from the competitive situation in Australia as well as declining foreign exchange rates in India and Australia.

Sales by category

Insecticides were the largest category with sales up by 3.1% to DKK 2,659 million, contributing to 40% of total agrochemical sales. A satisfactory growth was realized for several new products, including products based on fipronil, gamma-cyhalothrin and abamectin. Demand for traditional products was impacted by the decline in the North American market.

Cheminova’s sales by category (DKK million)
Category	Q4 2013	Q4 2012	%change	Full year 2013	Full year 2012	%change
Insecticides	712	725	-1.8	2,659	2,578	+3.1
Herbicides	249	268	-7.1	1,814	1,702	+6.6
Fungicides	360	364	-1.1	1,326	1,311	+1.1
others	49	47	+4.3	383	358	+7.0
Total	1,370	1,404	-2.4	6,182	5,949	+3.9

Herbicides sales rose by 6.6% to DKK 1,814 million and made up 27% of total sales. Demand for the sulfonylurea herbicides remained strong, and glyphosate accounted for just under 10% of revenue. The most significant increase was seen for the selective pethoxamide-based herbicides.

Fungicides sales slightly rose by 1.1% to DKK 1,326 million with accounting for 20% of total sales. Flutriafol developed positively, among other things following successful launches of mixture formulations in the USA and Brazil. Market penetration for products based on azoxystrobin is being strengthened in line with registrations being obtained in several countries.

Outlook

Cheminova anticipates organic sales growth of 8-10% in 2014 and a reported revenue growth of 3-5%. It also forecasts an EBITDA margin above 13% with the long-term financial objective of an EBITDA in the level of 13-18%.