SDS Biotech sales up 6.9% in the fiscal year ended March 2020

The Japan-based pesticide company SDS Biotech K.K recently announced financial results for the fiscal year ended March 2020. 

There was an increase in shipments of Daconil-related products (technical and formulation) for overseas markets and the decrease in shipment of Daconil raw material because the company restarted the technical manufacturing facilities at Yokohama Works in March 2019. Furthermore, in paddy herbicides, in addition to favorable domestic sales volume, overseas sales volume increased in line with the recent expansion of Benzobicyclon's overseas registration.

As a result, net sales were 12,387 million yen (UD$ 115.55 million, an increase of 6.9% year on year), with operating income of 1,074 million yen (UD$ 10.03 million, an increase of 9.2% year on year). Moreover, by recording of dividends income, ordinary income was 1,455 million yen (UD$ 13.58 million, an increase of 44.2% year on year), and net income came to 1,187 million yen (UD$ 11.08 million, an increase of 203.5% year on year).

Although the company have only one segment, the agrochemical business, they state the results by item in order to better describe their business trends.

Fungicide

Net sales for the fiscal year under review were 4,187 million yen (UD$ 39.1 million, an increase of 35.0% year on year). This was mainly due to the increase in shipments of Daconil products (technical and formulation) to overseas markets because they restarted the technical manufacturing facilities at Yokohama Works.

Paddy herbicide

Net sales for the fiscal year under review were 4,400 million yen (UD$ 41.09 million, an increase of 22.0% year on year). This was mainly due to favorable domestic sales volume, and overseas sales volume increased in line with the recent expansion of Benzobicyclon's overseas registration. Furthermore, the shipment to Turkey, newly registered in November 2019, was started.

Greenery-related products & Upland herbicides

Net sales for the fiscal year under review were 2,631 million yen (UD$ 24.57 million, an increase of 3.0% year on year). This was mainly due to favorable shipments of Dacthal technical, despite the adjustment of shipments of Dako-Green WDG, for which early purchase occurred in the previous fiscal year due to the plant incident in February 2018.

Insecticides

Net sales for the fiscal year under review were 624 million yen (UD$ 5.83 million, a decrease of 17.5% year on year). This was mainly due to the decrease in shipment of D-D products.

Others

Net sales for the fiscal year under review were 543 million yen (UD$ 5.07 million, a decrease of 65.3% year on year). This was mainly due to the decrease in shipment of Daconil raw material.

Future Outlook

In the full-year earnings forecasts, net sales are 12,500 million yen (UD$ 116.73 million), operating income is 1,000 million yen (UD$ 9.32 million), ordinary income is 1,400 million yen (UD$ 13.07 million), and net income is 980 million yen (UD$ 9.15 million).

It is difficult to calculate the amount of impact of the new coronavirus infection into the earnings forecasts for the full-year because they cannot consider the impact of this uncertainty.

In light of the recent expansion of the new coronavirus infection and requests from the government, the company has refrained from making unnecessary and non-urgent domestic and overseas business trips and from holding meetings and dining with a large number of people. They have also encouraged employees to work at home and work staggered hours using flextime. As a result, infection of their employees has not been confirmed as of the date of submission of this report.

At present, the Yokohama Works, which manufactures Daconil technical and formulations, is operating as usual. However, there is a possibility that operation of the plant may be restricted or stopped in the event of infection at the Yokohama Works or prolonged infection. Moreover, the future expansion and prolongation of infection may cause delays, shortages, and increased costs of raw materials, ingredients, and products they procure, because they have a system in which they outsource production of products other than Daconil-related products.

Their products are used in agricultural fields around the world, particularly in Asia. However, as infection continue to spread worldwide, there is a possibility to be suppressed the activities of their business, distributors, wholesalers, and logistics companies, as well as agricultural production. As a result, their future sales of their products may be affected.