Makhteshim turns to loss ahead of sale

Date:03-17-2011

Makhteshim Agan Industries Ltd. posted a loss for the fourth quarter and full year of 2010, ahead of its sale to China National Chemical Corporation (ChemChina).

The agrochemicals company posted a GAAP-based net loss of $132.2 million in 2010, compared with a GAAP-based net profit of $32.7 million in 2009. On a non-GAAP basis, however, the company posted a net profit of $20.8 million in 2010, a third of the net profit of $67 million in 2009.

Makhteshim attributed the swing to loss to $153 million in one-time expenses for restructuring in Israel, the restructuring of its Brazilian subsidiary Milenia, and the acquisition of Albaugh in the US.

Revenue rose 7% to $2.37 billion in 2010 from $2.21 billion in 2009. European sales totaled $965.6 million in 2010, 2.8% more than in 2009, Latin American sales declined by 0.2% to $539.6 million, and North American sales rose 0.5% to $404.3 million. Asia-Pacific sales rose 48.2% to $363.3 million, which the company attributed to increased sales in India and Australia.

Fourth quarter revenue rose 1.8% to $505.1 million from $496.2 for the corresponding quarter. GAAP-based net loss rose five-fold to $159.2 million, due to one-time expenses, from $29.8 million for the corresponding quarter. Non-GAAP net loss rose 33% to $39.7 million for the fourth quarter from $29.8 million for the corresponding quarter.

In January, Nochi Dankner's IDB Holding Corp. Ltd. unit Koor Industries Ltd. signed a deal to sell a stake of 7% in Makhteshim to ChemChina, which will also acquire the public's holding in the company. When the deal is completed, ChemChina will own 60% of Makhteshim and Koor will own 40%.

Makhteshim president and CEO Erez Vigodman said, "2010 marks a year of significant achievements for Makhteshim Agan… A new organizational model which came into force in the beginning of July, management changes in the Americas, an enhanced organization in Asia Pacific and Africa, advances in our operational realignment in Israel, the recent completion of the restructuring of our operations in Brazil, were all implemented during 2010, and will gradually improve our business results already in 2011."

Makhteshim's share price fell 0.9% in morning trading to NIS 17.49, giving a market cap of NIS 7.68 billion.