Cheminova agrochemicals sales up 4% in Q1 2013

Cheminova agrochemical sales were up by 4.2% to DKK 1,574 million in the first quarter ended on Mar 31, 2013. The revenue growth was achieved despite a delayed normal season in the northern hemisphere leading to inventory build-up in the distribution channel. Higher sales prices in local currencies and increased volumes are also the key factors of growth. The divestment of Stähler Switzerland impacted revenue negatively by DKK 78 million, while lower exchange rates for BRL(Brazilian reals) and INR (Indian rupees) in particular impacted revenue negatively by DKK 41 million.

Consolidated group revenues increased by 3.7% to DKK 1,670 million. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 39.6% to DKK 261 million. EBIT rose by 40.5% to DKK 208 million. The divestment of Stähler Switzerland has impacted the operating profit positively with a net effect of DKK 18 million. The group’s profit before tax increased to DKK 171 million.

Sales in North America substantially increased by 63.1% to DKK 181 million. The introduction of a new mixture formulation with flutriafol has been a success, and increased market penetration has been achieved with several differentiated products including, for example, gammacy halothrin as well as selective herbicides. Moreover, there has been strong demand for glyphosate, while traditional insecticides such as dimethoate, chlorpyrifos and malathion have also seen satisfactory growth. Several new product introductions through the established distribution channels are expected to further strengthen the company’s market position in the region.

Sales in Latin America dropped by 11.8% to DKK 277 million.Sales in Brazil are continuing to develop positively, while revenue saw a decline in both Argentina and Columbia due to portfolio streamlining. Throughout the region as a whole, efforts are put into improving the product portfolio, partly by new product introductions and partly through continued rationalizations involving the phase-out of less profitable products. The results of this process are reflected in improved earnings.

Sales were down by 7.5% to DKK 233 million in the international region, including Asia, Australia, New Zealand, the CIS countries, the Middle East and Africa. In Australia, market conditions remain difficult,while revenue in both India and Asia has developed positively. The difficult market conditions are leading to lower than expected revenue and earnings, but an improved product portfolio is expected to increase the gross margin.

Herbicides were the largest category, accounting for 36.1% of agrochemical sales, and sales rose by 5.6% to DKK 569 million. Growth is generated by the positive price development on glyphosate in addition to growth within the selective herbicides based especially on the active ingredient pethoxamide, as well as the sulfonylurea herbicides. Last year’s decision to establish competitive production of pethoxamide at the factory in Denmark has contributed positively.

Insecticide sales were up by 4% to DKK 551 million, accounting for 35% of agrochemical sales. Several new products have achieved satisfactory growth, including products based on the active ingredients fipronil and gamma-cyhalothrin, while there has also been satisfactory demand for several traditional products based on e.g. dimethoate and chlorpyrifos.

Fungicide sales increased by 2.2% to DKK 322 million . After the successful launch of a new mixture formulation with flutriafol in Brazil last year, azoxystrobin has done well and has now achieved registrations in several countries. Products based on the active ingredients tebuconazole and epoxiconazole have also developed well.

Out look

"The industry is expected to remain favored by good market conditions as high crop prices create a positive outlook in the agricultural sector. The late season start and the distribution channel inventory build-up during Q1 is not expected to impact sales for the rest of the year, unless further climatic challenges occur.” said the company.

Cheminova maintains the previously outlook of growth of approx. 10%, with revenue of up towards DKK 6.8 billion and an EBITDA margin of approx. 12%.