Cheminova’s agrochemical sales up 3% in Q3

Cheminova’s agrochemicals sales were increased by 2.7% to DKK 1,339 million in the third quarter of 2011. Consolidated sales were up 4.2% to DKK 1,440 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) boomed by 124.1% to DKK 121 million, and EBIT post more than ten times increase to DKK 78 million.

For the nine months, agrochemical sales were up by 4.7% to DKK 4,065million. Consolidated revenues were up just over 5% at DKK 4,408 million. Despite the continued decline in glyphosate sales, company’s growth is especially driven by the new products, which – together with slight price increases – have improved the contribution ratio even though it has been negatively impacted by high commodity and energy prices and unfavourable foreign exchange rate developments.

Revenue in Europe for Q3 was lower than for the same period last year, when sales were impacted by a late start to the season. Year-to-date growth in the region is 5% after positive developments for several of the new products, while the acquisition of Rogor® (dimethoate) has contributed to growth in sales of the conventional products. The contribution ratio for glyphosate was up in Q3 now benefitting from the changes made to the production in Denmark. Most local companies in the region are posting improved results, while Stähler in Germany as expected is still impacting results negatively. However, the restructuring of the German subsidiary which has now been launched will cut costs and improve earnings from next year.

In North America, sales of conventional insecticides were negatively impacted by serious drought in Texas, which has meant that cotton farmers have had to abandon a record number of acres. The transformation of the product portfolio is now taking place in region North America where the decline in glyphosate sales continued in Q3.

The very positive developments for new products have not been able to compensate for the decline in glyphosate sales, leading to lower overall sales for the region compared with last year. However, the transformation of the product portfolio has ensured a significant increase in earnings.

Sales in Latin America were up 15.9% to DKK 1,022 million. Strong pre-seasonal sales in Brazil and Argentina resulted in growth of 31% in Q3, confirming the very promising outlook for the current season. The product portfolio has been successfully transformed, resulting in substantial improvements in the average contribution ratio. This means that earnings in the region have been improved substantially. The Brazilian currency has been strengthened in the course of the year, but weakened substantially in September.
This resulted in increased financial expenses but contributed positively to strengthening the contribution ratio in the region.

Results remain strong in India, which is contributing substantially to growth and improved results for the region as a whole. Like in the rest of the region, new products are generating considerable growth and leading to improved contribution ratios. The Australian market remains highly competitive, and focus is increasingly on differentiated products where prices can more easily be maintained.

Herbicides’ share of sales has fallen to 31% (34%) due to the expected reduction in the sales of glyphosate. Sales of the new selective herbicides such as fenoxaprop, pethoxamid and the sulfonylurea products continue to grow satisfactorily.

Despite the phase-out of class I products, insecticides now account for 37% (35%) of revenue. The positive development is attributable to increasing sales of both conventional OP products and new products such as, for example, abamectin, imidacloprid and gamma-cyhalothrin.

Fungicides still accounted for 18% (18%) of revenue after continued growth from new products such as flutriafol and fluazinam.

Other crop protection products accounted for 6% (6%) of revenue. The segment comprises, for example, Headland micro-nutrients, which again saw positive developments, and growth regulators such as, for example, trinexapac, which is currently entering the European market.

Other activities now account for 8% (7%) of revenue after a good performance within fine chemicals.