2015 Top 20 Global Agchem Firms: Majority declining May open up era dominated by 4 giants

Recently, AgroPages published the Global Top 20 Agrochemical Enterprises 2015 listing. The year 2015 experienced unfavorable climate conditions, exchange fluctuations and falling prices of commodities, having caused a serious impact in the global agrochemical market, as reflected by the decreased sales performance of the global top 20. As regards the drop in sales, the majority of the top 20 experienced declining sales to different degrees, bearing in mind that almost all of them saw growth in 2014, and some achieved double-digit growth in 2013. As regards the change of ranking, compared with 2014, only 7 companies in 2015 remained unchanged in their ranking, while in 2014 the top 13 companies remained unchanged. Also, in 2015, there were newcomers to the top 20 list. The ranking of other companies also changed, reflecting the intense competition in the industry. It is worth noting that 7 Chinese companies were brought in, and there is hope that Chinese companies may occupy half of the seats in the future. Additionally, the entry of Chinese companies indicates the improving position of Chinese agrochemical companies, as they become leaders in the global market.

Sales of majority declined in 2015


For reasons known to all, the global agrochemical market was seriously affected by unfavorable climate conditions, exchange fluctuations and the falling prices of commodities, while higher amount of stocks and the overcapacity of glyphosate restrained pesticide price increases. According to the consultancy Phillips McDougall, global crop pesticide sales totalled $51.21 billion at the distribution level in 2015, down 9.6% year on year, which is also the same decline in sales performances among the global top 20.

After four years of continuous growth, the top 6 experienced decreases in sales in dollar terms in 2015, even at a double-digit drop (except Monsanto). Among the top 6, the sales of Bayer CropScience was completed for less than $10 billion; while decreasing sales at DuPont and Dow AgroSciences were most evident, and seen as the reasons for the quick agreements to merge the 2 companies at the end of 2015, as they sought to collaborate together as a response to the adverse market situation. However, when calculated in the reported currency, Bayer CropScience and BASF actually saw increases in sales of some 7% in EUR.

Also, there were great changes in the company’s ranking from No. 7 to No.13 due to mergers and acquisitions, both with changes in ranking and in new entries to the list. FMC’s acquisition of Cheminova from Danish Auriga Industries enabled it to jump to first place. Also, Platform Specialty Products(PSP) joined the list, ranking No.12. From October 2014 to February 2015, the company acquired 3 other companies–Agriphar, Chemtura AgroSolutions and Arysta LifeScience, which ranked No.12 in 2014. Albaugh is a global generic crop protection product provider, ranking No.13 on the list for the first time.

In 2015, sales in dollar terms of the No.7 ranked ADAMA (ChemChina subsidiary) dropped 4.8%, but still maintained a 7.4% growth, if calculated at constant exchange rates. ADAMA’s sales in dollar terms achieved a slight 5.2% growth in North America, but had decreases in all other regions, to certain degrees. However, if calculated at a constant exchange rate, sales would appear with increases to some degree in all regions, especially in Latin America, which reached 17% growth.

The No.8 and No.9 ranked FMC and Nufarm exchanged rankings over that of 2014. FMC’s acquisition of Cheminova enabled its pesticide sales to increase slightly, by 3.6% in 2015. If the discreet value of the consolidated statement combining Cheminova is used for calculations, then its sales dropped 23% in 2015. Nufarm’s pesticide sales in dollar terms decreased 7.4%, but increased 4.0% in AUD calculations, particularly the net profit calculated in AUD increased to as high as 35.5%. If calculated in AUD, the company’s pesticide sales increased in double-digit in America and Asia, but decreased in Europe and Oceania.

Meanwhile, the No.10 and No.11 ranked UPL and Sumitomo Chemical also exchanged rankings over that of last year. UPL saw 4.2% growth in dollar terms, and increased 11% in Rupees. All of the company’s sales in Rupees increased, particularly its sales in Latin America, which registered a 25% increase. Sumitomo Chemical’s sales in dollar terms decreased about 10.5%, but sales in JPY increased 3%.

Further, the No.12 and No.13 PSP and Albaugh are both listed in the top 20 for the first time. If sales in 2014 of PSP’s acquired companies are consolidated, its sales in 2015 in dollar calculations dropped 16%. If a constant exchange rate is used for calculations, then a 1% increase was achieved. The company pointed out that its increase was attributable to the sales growth in local currencies in Europe and Latin America. Albaugh’s sales, in dollar terms, dropped 10%, but the company extended its investment in Latin America and acquired FMC’s Brazilian subsidiary, Consagro. Furthermore, the company recently made an investment of $300 million to reinforce its presence in the Brazilian market, with the hope of promotingfurther increases.

Among the 7 companies ranking No.14 to No.20, 6 of them are Chinese companies, except for Japan’s Kumiai Chemical, which ranked No.17. Additionally, newcomers Jiangsu Yangnong and Jiangsu Huifeng ranked, respectively, No.18 and No. 20, being among the few companies that reported increases. It is worth mentioning that Jiangsu Huifeng achieved a 20% increase, being the company with the greatest growth on the top 20 list. The company said that its efforts in exploring markets and innovative marketing contributed to its growth. Jiangsu Yangnong’s sales in dollar terms increased 6%, and sales in Yuan increased 9.4%. The company’s exports, which were two-thirds of total sales, remained at the same level as last year, while sales in the domestic market increased some 32%.

The sales figures for four other Chinese companies among the remaining top 20 all declined, of which Nanjing Red Sun dropped to No.16 from No.14 last year. Meanwhile, Red Sun ranked No.1 among China’s Top 100 Agrochemical Enterprises. The No.15 ranked Zhejiang Wynca suffered from the historically low price of glyphosate, which is its major product, resulting in a 12.5% decrease in dollar terms. Next to Wynca stands Huapont Life Science (formerly Huapont-Nutrichem), whose sales in dollar terms dropped 12.5%. The No.19 position was firmly held by Shandong Rainbow, whose sales in dollar terms dropped about 8%, which, however, did not affect its No.1 export position.

Industry integration intensified, which may open up a new era of four giants

With the merging of DuPont and Dow AgroSciences, ChemChina’s acquisition of Syngenta, the merging of Bayer CropScience and Monsanto, as well as ChemChina’s recent acquisition of the 40% stakes of ADAMA, the top 6 companies in the industry will step down from history, and might be replaced by a new era dominated by 4 giants - DowDuPont, ChemChina-Syngenta, Bayer-Monsanto, and BASF. The second tier FMC and PSP have also conducted acquisitions of targeted companies. In the short run, the structure of second tier players (ranking of 7 to 13) has been formed.

An unfavorable agricultural market environment and the considerable volume of mergers and acquisitions have brought great challenges to the existence of small and medium size companies (companies ranking from No.20 to No.35), who are being forced to re-consider their development strategies. In the future, some of the small and medium size enterprises are expected to improve their performances in the global agrochemical market, attributable to their segment market positioning, featured product mix and internationalized deployment.

The intercompany mergers and acquisitions also mean more seats are becoming available to a greater number of industry players. It looks as though the present round of mergers and acquisitions will provide 2 or 3 seats to other companies. As seen from current sales performances, these seats will possibly be taken by Chinese companies (7 newcomers being Chinese companies in 2015). This implies that half of the seats in the future may be taken by Chinese companies, which indicates the increasingly important position of Chinese agrochemical enterprises in the global agrochemical market.

In sharp contrast to Chinese companies, a few Japanese companies have gradually exited from the top 20 over the last 2 years. However, the R & D capacity of Japanese agrochemical companies for creation of innovative products set a positive example for the industry, and Japanese companies may rise again over some period of time.

As of today, the majority of the top 20 have announced their sales for H1 2016. Generally speaking, the global agrochemical market of 2016 is not very optimistic. The agricultural economy is still rather weak, glyphosate prices are low, and climate conditions may still be harmed by the El Nino phenomenon.