Makhteshim Agan sales flat in Q3

Revenues for the third quarter of 2012 of Makhteshim Agan totaled $643.5 million up by 0.8% compared with the third quarter of 2011. The increase derived from higher selling prices and increased quantities sold in Asia and Europe, which compensated for negative exchange rate fluctuations and higher raw material and active costs as compared to the third quarter of 2011. Gross profit for the third quarter totaled $199 million, up 0.8% compared with $198 million for the same period in 2011. Operating profit increased by 5.3% to $53 million, compared with $50 million for the third quarter of 2011. Net income totaled $13 million, or 2.0% of sales, up by 30.1%. EBITDA increased by 7.6% to $89.6 million, compared with $83.3 million for the third quarter of 2011.

For the nine-month period, sales totaled $2,255.0 million, a 5.3% increase of compared with $2,142.1 million for the first nine months of 2011. Gross profit totaled $741 million, up 7.1% compared with $692 million in the first nine months of 2011. The increased gross profit reflected the higher sales countered by a rise in raw material prices and the erosion of the value of the dollar, resulting in a slight reduction of the gross margin. Operating profit increased by 11.7% to $278.6 million. For the nine-month period, EBITDA totaled $388.7 million, up by 12.4%.

Commenting on the results, Mr. Yang Xingqiang, Makhteshim Agan’s Chairman of the Board, said, “We are pleased to report a strong quarter with double digit sales growth in the Asia Pacific & Africa region, as well as improvement in all our financial indicators for the first nine months, including EBITDA, operating profit and net income. We continue to implement the Company’s strategic initiatives, including the integration of MAI with ChemChina's agrochemicals activities. In parallel, we are executing on our operational work plan that will allow us to strengthen our ability to create simplicity in agriculture for farmers around the globe.”

Makhteshim Agan’s sales results ($ million)
Q3 ended Sep. 30	Q3 2012	Q3 2011	%change	Nine-month 2012	Nine-month 2011	%change
Sales	643.5	638.5	+0.8	2,255.0	2,142.1	+5.3
Gross profit	199.3	197.7	+0.8	740.9	691.7	+7.1
Net income	13.1	10.1	+30.1	144.4	147.2	-1.9
EBITDA1	89.6	83.3	+7.6	388.7	346.0	+12.4
EBIT2	52.8	50.1	+5.3	278.6	249.3	+11.7
1 earnings before interest, tax, depreciation and amortisation; 2 earnings before interest and tax.

Sales by region

Sales of Europe in the third quarter of 2012 amounted to $211.7 million with an increased of 2.3%. For the first nine months, sales amounted to $955.8 million, up by 4.8%. Despite the erosion of European currency exchange rates, the Company was able to increase total sales in the quarter and in the Reporting Period by raising selling prices, increasing quantities sold, and by currency hedging transactions which provided partial compensation for the erosion of currency exchange rates.  

For Latin America, sales in the third quarter dropped by 2.1% to $188.1 million stemmed from a decrease in quantities sold, which was partly compensated for by higher selling prices, mainly in Brazil, compared with the corresponding period in 2011. Sales in nine-month grew by 3.0% to $432.8 million.

North America sales in the third quarter reached $88.5 million, compared with $95.6 million in the third quarter of 2011, a decrease of 7.5% due to a decrease in quantities sold, a reflection of the fall in demand resulting from the drought in the US. Sales in the nine-month increased 4.4% to $389.9 million. The increase in total sales stemmed from an increase in quantities sold, which was partly offset by the erosion of selling prices compared with the corresponding period last year.

Growth of selling prices, which was partly offset by the erosion of local selling currencies (primarily the Indian rupee) boosted sales in Asia Pacific and Africa. Sales rose 10.7% to $130.2 million in the third quarter and rose by 11.4% to $399.0 million in the first nine months. Sales were both decrease a little in the third quarter and nine-month in Makhteshim Agan’s domestic market, Israel.

Makhteshim Agan’s sales results by region ($ million)
Q3 ended Sep. 30	Q3 2012	Q3 2011	%change	Nine-month 2012	Nine-month 2011	%change
Europe	211.7	207.0	+2.3	955.8	911.8	+4.8
Latin America	188.1	192.1	-2.1	432.8	420.2	+3.0
North America	88.5	95.6	-7.5	389.9	373.6	+4.4
Asia Pacific & Africa	130.2	117.6	+10.7	399.0	358.3	+11.4
Israel	25.0	26.1	+3.7	77.5	78.2	-1.0
Total	643.5	638.5	+0.8	2,255.0	2,142.1	+5.3

Mr. Erez Vigodman, President and CEO of Makhteshim Agan, commented, “the continued improvement in our quarterly results proves MAI's ability to expand and grow while strengthening our operational discipline and our customer focus over time. I am pleased with our ability to significantly grow our operating profit, EBITDA and net income for both the quarter and first nine months of the year, despite the quarter’s unfavorable FX environment and challenging weather in the U.S., Russia and Eastern Europe. We continued to introduce new differentiated off-patent solutions in many of our territories while compensating for higher raw material prices. Our strengths in market reach and product registration allowed us to cement our market positioning and will continue to play a pivotal role in our strategy going forward.”