With revenues and Ebitda rising, Bioceres Crop Solutions waits for the launching of HB4 technology

Last September 16th, the leadership of Bioceres Crop Solutions made its first conference call after to be a public company on the New York Stock Exchange. Leading by CEO Federico Trucco and CFO Enrique Lopez Lecube, the company presented a solid financial statement for the 2019 fiscal year.

Perhaps, the most relevant aspect of their presentation was the revenues peaking at US$160 million and showing a 20% increase year over year (US$134 M FY2018) or an 11% on a comparable basis.

Drove by sales of adjuvants in the Brazilian market the Crop Protection unit business explained 56% of the revenues, while the Crop Nutrition unit, where inoculants are the main product, explained another 28% of the revenues. Finally, Seeds and Integrated Products (where HB4 trait represents a huge promise) contributed with the remaining 16% of the revenues.

“In the inoculant business we are global leaders with approximately 21% of market share”, López Lecube remarked, and he stressed the business potential of Synertech Industrias, a JV with De Sangosse to produce and commercialize micro-beaded fertilizers, where the company accounts with a plant to produce 50,000 tons per year.

The last segment, the Seed and Integrated Products, showed the highest profit rate of the three business units. There, the Ecosoy and Ecowheat products, containing the HB4 technology that confers the crops drought tolerance (and glufosinate tolerance in the case of the wheat), is expected that bring a great contribution to the revenues of the company.

CEO Federico Trucco said that HB4 technology in soybean is adapted to 85 million hectares in the US, Brazil, and Argentina. Only in this last country, the technology could be used in 21 million hectares, generating more than 60 dollars per hectare of value for farmers. But the launching of the technology depends on the approval by the Chinese authorities, expected now by 2020.

For now, Bioceres is preparing for planting 3,000 hectares of HB4 soybean in Argentina, to generate a seed volume to cover 60 to 90,000 hectares in the 2020/21 season, and to cover one million hectares in the following campaigns. Also, they are producing HB4 wheat seed to cover 10,000 hectares next season.

Returning to the financial results, EBITDA jumped to US$41.3 million from US$22.4 million. This 85% increase liquefies the debt that passed from 4.34X in the 4Q of 2018 to 2.25X in the last quarter of the 2019 fiscal year.

Meanwhile, de peso devaluation in Argentina improved the financial results of the company. For example, the R+D unit demanded US$3.7 million this FY versus 4.0 million in the precedent cycle, and the industrial costs nominated in pesos, also were liquefied by the depreciation.