Cheminova agchem sales up 10% in Q1 2014

Cheminova agrochemical sales posted a 10.4% rise to DKK 1,737 million in the first quarter ended on Mar 31, 2014. The growth was due to the favorable market conditions with continued high crop prices and an early start to the season in the main markets in Europe.

Consolidated group revenues increased by 9.3% to DKK 1,826 million. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) dipped by 0.8% to DKK 259 million. EBIT rose by 2.4% to DKK 213 million.

Sales by region

Sales in North America substantially dropped by 22.1% to DKK 141 million for a very cold winter, representing 8% of total sales. “The negative development is expected to level out in Q2,” Cheminova points out.

Sales in Latin America dropped by 2.5% to DKK 270 million, contributing to 15% of total sales . An organic growth of 9% was achieved despite very dry climate conditions in large parts of Brazil. The development is affected by a decline in the fungicide sales related to the drought which was compensated by a higher sale of insecticides. Exchange rates dampened the sales growth.

Sales were up by 0.5% to DKK 191 million with accounting for 10% of total sales in the international region, including Asia, Australia, New Zealand, the CIS countries, the Middle East and Africa. An organic growth of 17% was achieved primarily driven by insecticides and fungicides along with improved weather conditions in Australia.

Sales by category

Insecticide sales were up by 2.7% to DKK 566 million, representing 31% of agrochemical sales. An organic growth of 9% was achieved. Several new end products have achieved satisfactory growth, including products based on gamma-cyhalothrin and acrinathrin, while there has also been satisfactory demand for several traditional products based on e.g. chlorpyrifos and malathion.

Fungicide sales increased by 2.5% to DKK 330 million, making up 18% of agrochemical sales. An organic growth of 6% was achieved. Products based on flutriafol and tebuconazole developed well. In March, a new registration for azoxystrobin was obtained in Great Britain which is paving the way for product introductions in the 2014 season. This registration represents Cheminova’s first registration for azoxystrobin in Western Europe.

Outlook
Cheminova expects its agrochemicals to be developed positively in 2014 as the considerable demand for food continues to support high crop prices. The company forecasts an organic sales growth of 8-10% and a reported revenue growth of 3-5% following the continued positive developments together with further improvements of the product portfolio.

Cheminova anticipates an EBITDA margin above 13% as well as a positive free cash flow, despite an increasing level of investments in product development and production facilities.