AgroPages-Hokko Chemical’s crop protection business sales down 1% in FY 2016-Agricultural news

Sales of Hokko Chemical Industry’s crop protection segment was decreased slightly by 0.9% to ￥28,418 million for the 2016 fiscal year which ended November 30th 2016. Operating income slipped by 9.6% to ￥739 million. Revenue of crop protection business accounts for approximately 70% of the company’s total income. Operating income of this segment accounts for some 30% of the total income.

Hokko Chemical’s crop protection sales by products (Millions of yen)
Category	FY 2016	FY 2015	change%
Insecticides	5,365	5,840	-8.1
Fungicides	7,842	7,855	-0.2
Insecticide/Fungicide combinations	6,541	6,975	-6.2
Herbicides	8,157	7,580	+7.6
Total	28,418	28,679	-0.9

During the 2016 fiscal year, domestic sales was down by 0.7% to ￥25,782 million, which accounting for 90.7% of the total sales of this segment. Domestic sales of paddy rice herbicides grew because of sales promotions of new products containing ipfencarbazone, but sales of other products decreased. Although orders increased in overseas, the sales was dropped by 2.8% to ￥2,636 million, the effect of the strong yen led to a decrease in sales. Overseas sales account for 9.3% of the segment’s total income.

According to Hokko, 67.4% of its pesticide sold in Japan was for used on paddy rice, the others were for vegetables, fruits and other crops. The company’s share in the domestic market of pesticide for paddy tice is estimated accounting for 16% of the whole sector.

Hokko also highlighted a proprietary paddy herbicide, ipfencarbazone, in its annual report. Ipfencarbazone, belongs to the triazolinone chemistry class, was registered in August in 2013, launched in 2014, it has received the achievement award (technology) of Pesticide Science Society of Japan in 2016. Ipfencarbazone is highly safe to paddy rice, excellent initial efficacy and long residual effect on “Echinochloa sp” which is most serious weeds in rice-producing areas. In Japan, sales of ipfencarbazone have increased since its launch in 2014. The estimated used area of this product has reached to 145,000 ha in the fiscal year 2016 (crop protection year begins from October to next September in Japan). For overseas market, the company is expanding target countries in Asian rice market. First overseas registration was approved in South Korea and sales were launched in April 2014. Other registration is expected to be in Taiwan in 2018. Initial development work has started in Vietnam, India, Thailand, Indonesia, etc. Hokko expects the number of registration of ipfencarbazone will reach 18 at the end of November 2017.

Outlook for FY 2017

Hokko expects sales of crop protection business up by 0.6% to ￥28,598 million, operating income is estimated to down 19.2% to 597 million because of SGA, such as research and development expenditures. With exports, while the shipment quantity is expected to increase, trends in the domestic pesticide market mean that overall sales are generally expected to remain flat.

Main activities in the FY 2017

For domestic sales, the company will strengthen the spread of its core products, such as paddy rice herbicides and paddy rice seeding box treatment. For overseas sales, Hokko is focusing on expanding the number of countries in which its own company developed products are registered, and bringing the new manufacturing plant in Niigata, which was completed in the previous fiscal year, into full-scale operation to manufacture products for export satisfactorily.