Isagro agchem sales down 24% in Q2 2013

Date:08-13-2013

Isagro’s agrochemicals sales dropped by 23.5% to €26.7 million in the second quarter ended June 30, 2013. The total sales decreased by 22.8% to € 28.4 million.

Isagro sales results (€000)
Q2 ended June. 30	Q2  2013	Q2  2012	Change %	Six-month    2013	Six-month    2012	Change %
Sales	28,367	36,753	-22.8	60,697	79,353	-23.5
-Agrochemicals	26,700	34,900	-23.5	56,800	73,900	-23.1
EBITDA*	533	4,039	-86.8	1,546	7,795	-80.2
EBIT** (loss)	(1,849)	1,406	na	(3,314)	2,764	na
* earnings before interest and tax depreciation and amortisation ** earnings before interest, tax

The decline of sales is due to the carried-over effect of 2012 drought, which impacted the key segments in which Isagro operates (United States and Italy) and by adverse weather conditions in the first half of 2013, in line with the estimates for the period.

Second-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) declined 86.8% at €533,000. EBIT turned negative, falling from €1.406 million to a loss of €1.849 million.

First-half agrochemical sales were down by 23.1% to €56.8 million. The total sales fell by 23.5% to €60.7 million. First-half EBITDA declined by 80.2% to just over €1.5 million. EBIT turned from a €2.8 million profit to a loss of over €3.3 million.

Isagro has a limited direct presence in distribution and directly distributes in only four countries, operating in the other countries as a manufacturer (thus a supplier) of national distributors: as a consequence, Isagro didn’t benefit of the recovery of purchases by farmers and resellers from national distributors, the latter utilizing the overstock as of 2012-end and thus limiting new purchases from manufacturers. With specific reference to Isagro direct distribution activities, the relevant sales grew during the first quarter of 2013 by about 8% compared to the same period of the previous year.

The Company estimates that the already described carried-over effect (the impact of which clearly has a temporary and a not structural nature, within a market scenario perspective remaining sound) was absorbed during the first six months of 2013, with partial recovery of sales expected mainly during the fourth quarter of the current year, aligned to past seasonal trends.

outlook

Isagro is expecting a partial recovery of Revenues during 2013 second half, especially with reference to the fourth quarter, in line with past experience.

"However, due to the possible termination of some distribution collaborations with third parties following the alliance with Gowan, lower sales are possible in the last quarter vs. what was forecasted in the 2013 estimates communicated to the market. The quantification of such lower sales – which, as already previously highlighted, will be compensated in the mid-term by the already identified synergies with Gowan – is still under evaluation, but a first preliminary estimate leads to an expectation of consolidated revenues as of 2013-end of about € 135 million (compared to the level of € 140 million previously communicated)." Isagro said.

The company is working at the 2014-2018 business plan, which shall be released by the end of the year.