The Board of Directors of Isagro S.p.A. has approved the Consolidated Interim Result Report as of September 30th, 2019, which will be made available to the public following the terms and the modalities of the applicable Laws.
The Market and Isagro
The first nine months of 2019 were characterized by market and weather conditions which were particularly unfavourable, with general downturns at distributor level (mainly in North America and Europe) and a tightening of the regulatory picture in Europe, with consequent “phase-out” of different products in the European Union.
In this framework, Isagro, selling largely to national distributors, with North America and Europe representing its main markets, was particularly penalized, although with expectations of partial recovery of sales in the fourth quarter, following the progressive normalization of external conditions.
9M 2019 consolidated financial results
In the first nine months of 2019, Isagro registered:
• Revenues of 96.6 Euro million versus the 115.2 million of the first nine months of 2018;
• an EBITDA of 1.4 Euro million versus the 12.7 million of the first nine months of 2018;
• a Net result in loss for 9.7 Euro million versus the profit of 2.6 million of the first nine months of 2018;
• a Net financial position of 64.0 Euro million, which includes the effect of the first adoption of IFRS 16 for 5.3 Euro million, versus the values of 45.1 Euro million and of 52.3 Euro million respectively as of December 31st, 2018 and as of September 30th, 2018 and a debt/equity ratio of 0.75 (equal to 0.69 net of IFRS 16 effect).
The aforementioned decrease of Revenues in 9M 2019 versus 9M 2018 is attributable (i) to the negative performance of B2B sales (-16.6 Euro million versus 9M 2018), namely to national distributors in Europe (in particular in Italy), in the United States and in India (with reference to export sales), (ii) to lower revenues from M/L Agreements (-5.0 Euro million versus 9M 2018), only partially offset (iii) by higher B2C sales, represented by Isagro’s direct sales on selected national markets (+3.4 Euro million versus 9M 2018). Isagro, which due to its size has direct sales structures only in selected markets, was impacted in particular by the need of some of its major customers, as already mentioned especially in the United Stated and in Italy, to limit purchases for the period in order to consume existing stocks.
Perspectives and strategic direction
With reference to the full year 2019 perspective, Isagro, on a like-for-like basis, expects a level of revenues from agropharma and services lower than the value of 12 months of 2018, despite a partial recovery of turnover concentrated in the fourth quarter, and a consolidated loss in line with the first nine months. Including the accounting and financial effects of the sale of Isagro Asia, however, Isagro estimates to be able to significantly reduce such loss, with an increase in Equity and an expected NFP not higher than 25 Euro million. In this regard, it shall be remembered that on November 4th, 2019 it was signed the share purchase agreement for the sale of Isagro Asia to PI Industries. It shall be noted that the transaction includes pre-emption rights in favour of PI in case of possible divestment by Isagro of some specific assets.
After having already communicated in the past its strategic decision to no longer invest in the development of new organic chemical molecules originated from its own Innovative Research, Isagro is working to a new business model, which shall be based on the development mostly of biosolutions and copper fungicides. Such development will be financed through extraordinary operations aiming at better valorising corporate assets of organic chemistry, the value of which is deemed by the Directors currently not adequately expressed. In such a frame, Isagro shall adopt the necessary measures of organizational redefinition.